Appeal details
Counselvise Citation
[2015] 134 COUNSELVISE.COM (IT) 1271 (ITAT-PUNE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
05-08-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Next Hearing Date
18-11-2013
Assessment Year
2009-2010
Appeal Filed On
01-03-2012
Judgement Text
] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !' # BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM / ITA NO. 282/PN/2012 $ % % / ASSESSMENT YEAR : 2009-10 META ROLLS & COMMODITIES PVT. LTD., GUT NO.48, PHASE-II, MIDC, JALNA-431 203 PAN NO. AADCM3474C . /APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . /RESPONDENT / ITA NO.411/PN/2012 $ % % / ASSESSMENT YEAR : 2009-10 ACIT, CIRCLE-1, AURANGABAD . / APPELLANT V/S META ROLLS & COMMODITIES PVT. LTD., GUT NO.48, PHASE-II, MIDC, JALNA-431 203 PAN NO. AADCM3474C . / RESPONDENT / ITA NO. 292/PN/2012 $ % % / ASSESSMENT YEAR : 2009-10 RAJURI STEELS PRIVATE LIMITED, F-12, PHASE-II, ADDL. MIDC, JALNA 431 203 PAN NO. AABCR5546A . / APPELLANT V/S ADDL.CIT, RANGE-1, AURANGABAD . / RESPONDENT / ITA NO. 429/PN/2012 $ % % / ASSESSMENT YEAR : 2009-10 ADDL.CIT, CIRCLE-1, AURANGABAD . / APPELLANT V/S 2 RAJURI STEELS PRIVATE LIMITED, F-12, PHASE-II, ADDL. MIDC, JALNA 431 203 PAN NO. AABCR5546A . /RESPONDENT / ASSESSEE BY : SHRI J.P. BAIRAGRA / DEPARTMENT BY : SHRI SUNIL GANOO (SPECIAL COUNSEL) & / ORDER PER R.K. PANDA, AM : THE ABOVE CROSS APPEALS FILED BY THE RESPECTIVE ASSESSEE S AND THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 30-12-2011 OF CIT(A), AURANGABAD PASSED UNDER SECTION 14 3(3) OF THE INCOME TAX ACT, 1961, RESPECTIVELY RELATING TO ASSESSMEN T YEAR 2009- 10. FOR THE SAKE OF CONVENIENCE, BOTH THE CROSS APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP ITA NO.282/PN/2012 AND ITA NO.411/P N/2012 AS THE LEAD CASE. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE WAS ENGAGED IN THE MANUFACTURE OF INGOTS / BILLETS. THE ASSESS EE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,19 ,18,130/- ON 29.09.2009. THE CASE WAS SELECTED FOR SCRUTINY AND NO TICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE. TH E ASSESSING OFFICER RECEIVED INFORMATION FROM THE OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, AURANGABAD VIDE LETTER DATED 29.03.2010 THAT THE ASSESSEE HAD INDULGED IN SUPPRESSION OF PRODUCT ION AND CLANDESTINE REMOVAL OF FINISHED PRODUCTS WITHOUT PAYMENT OF EXCISE DUTY. THE ADJUDICATION ORDER OF CCE, AURANGABAD QUANTIFY ING THE VALUE OF SUPPRESSED PRODUCTION WAS ALSO AVAILABLE WITH THE ASSESSING OFFICER. IN VIEW THEREOF, THE ASSESSEE WAS SHOW CAUSED AS TO THE AMOUNT OF INCOME ESCAPING ASSESSMENT TO BE ADDED IN THE HANDS OF / DATE OF HEARING : 19.05.2015 !' / DATE OF PRONOUNCEMENT: 05.08.2015 3 THE ASSESSEE. THE ASSESSING OFFICER CONSIDERED THE MANUFA CTURING PROCESS OF THE ASSESSEE IN DETAIL AND NOTED THAT THE ELE CTRICITY WAS ONE OF THE MAJOR COST INPUT IN THE MANUFACTURE OF INGOTS / BILLE TS AND ALSO COUNTED FOR MAJOR SHARE OF EXPENSES. AFTER GOING THROUG H THE INFORMATION FURNISHED BY THE ASSESSEE I.E. THE FIGURES OF INPU T AND OUTPUT RATIO AND MONTHWISE ELECTRICITY CONSUMPTION / MT S TEEL BARS, FURNISHED BY THE ASSESSEE IN RESPONSE TO THE QUERY RAIS ED BY THE ASSESSING OFFICER, THE ASSESSING OFFICER OBSERVED THAT THE M INIMUM ELECTRICITY CONSUMPTION COMES TO 1108 UNITS PER MT AND M AXIMUM ELECTRICITY CONSUMPTION COMES TO 1783 UNITS PER MT. AS P ER THE ASSESSING OFFICER, THERE WAS DEVIATION IN ELECTRICITY UNIT CONS UMPTION PER MT I.E. 675 UNITS WHICH WAS UNREASONABLE AND UNACCEPT ABLE. BECAUSE OF THE HUGE DEVIATION IN THE ELECTRICITY CONSUMPTIO N, THE PRESUMPTION OF THE ASSESSING OFFICER WAS THAT THE PRODUCTION DISCLO SED IN THE BOOKS WAS SUBSTANTIALLY SUPPRESSED. THE ASSESSIN G OFFICER SHOW CAUSED THE ASSESSEE AS TO WHY ADDITION IN HIS HAND S SHOULD NOT BE MADE. IN VIEW OF SIMILAR ADDITION BEING MADE IN OTHER STE EL CASES AND ALSO BECAUSE OF THE VARIATION IN ELECTRICITY CONSUMPTION DURING THE YEAR, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILE D TO JUSTIFY THE EXCESS ELECTRICITY CONSUMPTION AND THE WIDE VARIATIONS FROM MONTH TO MONTH. THE ASSESSING OFFICER ACCORDINGLY, COMPUTED THE ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PR ODUCTION AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE CIT(A) NOTED THAT THE ISSUE RAISED IN THE PRESENT APPEAL WAS COMMON TO THE ISSUE RAISED IN THE HANDS OF OTHER MANUFACT URERS OF MS INGOTS / BILLETS. THE CIT(A) HELD AS UNDER:- 7. THE FIRST ISSUE TO BE DECIDED IS WHETHER ON THE FACTS AND IN LAW, THE A.O. IS JUSTIFIED IN ARRIVING AT THE SUPPRESSED PRODUCTION/SALE OF MS INGOTS/BILLETS ON THE BASIS OF ELECTRICITY UNIT CON SUMPTION. 4 7.1 IN THIS REGARD, THE VARIOUS CONTENTIONS RAISED BY THE APPELLANT AND OTHER MANUFACTURES OF MS INGOTS/BILLETS WHO ARE ALSO IN APPEAL BEFORE ME ARE SUMMARIZED AS UNDER (1) THE BOOKS OF ACCOUNTS OF THE APPELLANT ARE AUD ITED UNDER COMPANIES ACT AS WELL AS INCOME TAX ACT. IN SOME OF THE YEARS UNDER APPEAL, IN SOME OF THE CASES OF MS INGOTS/BILLETS M ANUFACTURERS THE SCRUTINY U/S 143(3) FOR EARLIER YEARS WAS COMPLETED WITHOUT ANY ADDITION TOWARDS SUPPRESSED SALE. (2) CENTRAL EXCISE DEPARTMENT VIDE ITS ORDER HAS SIMPLY & INCORRECTLY ESTIMATED THAT FOR MANUFACTURING ONE METRIC TON MS INGOT, 1026 UNITS OF ELECTRICITY ARE REQUIRED. (3) THE ORDER OF COMMISSIONER OF CENTRAL EXCISE IS BASED ON ESTIMATES, ACADEMIC STUDY AND THEORETICAL CALCULATI ONS AND HENCE IS CHALLENGED BY THE ASSESSEE BEFORE CESTAT. (4) THE CENTRAL EXCISE DEPARTMENT HAS ACTUALLY VERI FIED ELECTRICITY CONSUMPTION IN APPELLANT'S PLANT WHICH WAS FOUND TO BE IN ORDER. THE EXCISE DEPARTMENT SHOULD HAVE WORKED OUT THE ELECTR ICITY UNITS REQUIRED FOR PRODUCING ONE METRIC TON MS INGOTS/BIL LETS BY ACTUAL PHYSICAL VERIFICATION IN THE PLANTS OF VARIOUS MANU FACTURERS. (5) THE RELIANCE PLACED BY THE COMMISSIONER OF CENT RAL EXCISE IN ITS ORDER ON THE REPORT OF I.I.T., KANPUR AND TECHNICAL REPORT OF DR.BATRA IS MISPLACED AS THE COPIES OF THE SAID REPORTS WERE NE ITHER GIVEN TO THE APPELLANT NOR ANY CROSS EXAMINATION WAS ALLOWED. (6) THE EXECUTIVE DIRECTOR, ALL INDIA FURNACE ASSOC IATION VIDE HIS REPORT DATED 18/03/2008 HAS STATED THAT THE HIGHER CONSUMPTION OF ELECTRICITY CAN BE ATTRIBUTABLE TO LIGHT SCRAP AND SPONGE IRON ETC. REASONS. (7) THE EXCISE DEPARTMENT HAS CONSIDERED ENTIRE ELE CTRICITY UNITS FOR PRODUCTION WHEREAS ABOUT 75% UNITS ARE CONSUMED FOR FURNACE I.E. FOR PRODUCTION. (8) THE RELIANCE IS PLACED ON THE DECISION IN THE C ASE OF ACIT VS. SRJ PEETY STEELS PVT.LTD. (2011) 137 TTJ 627 (PUNE) WHE REIN IT HAS BEEN HELD THAT NO .ADDITION COULD BE MADE MERELY ON THE BASIS OF TECHNICAL ELECTRICITY CONSUMPTION FORMULA. (9) THE A.O. HAS OBSERVED IN THE ASSESSMENT ORDERS THAT THE UNIT CAPACITY INCLUDES USAGE OF FURNACE LOAD OR AUXILIAR Y LOAD; A 6 MT FURNACE WILL CONSUME SLIGHTLY MORE POWER THAN 25 MT FURNACE PER METRIC TON OF PRODUCTION; A CONTINUOUS CASTING PROC ESS USES MORE ELECTRICITY, HOWEVER, THE A.O. HAS NOT GIVEN EFFECT TO THE ABOVE OBSERVATIONS IN THE ASSESSMENT ORDER. (10) THE UNDISCLOSED PRODUCTION CALCULATED ON THE B ASIS OF ELECTRICITY CONSUMPTION IS NOT JUSTIFIED AS PER VARIOUS DECISIO NS UNDER EXCISE ACT AND ALSO INCOME TAX ACT RELIED ON BY THE APPELLANTS . SOME OF THE DECISIONS HEAVILY RELIED ON ARE R.A. CASTINGS VS. C OMMISSIONER OF EXCISE, MEERAT-I 2009 (237) ELT 674; THIS DECISION IS UPHOLD BY THE HON'BLE ALLAHABAD HIGH COURT; NASHIK STRIPS PVT.LTD . VS. COMMISSIONER OF CENTRAL EXCISE, NASHIK 2010-TIOL-11 10-CESTAT (MUM); BHAVSHAKTI STEEL MINES P.L. VS. CCE, NASHIK ORDER NOS.356-3 57/11/EB/C-II, CESTAT, MUMBAI DATED 08/04/2011. (11) THE COST OF PRODUCTION CLAIMED BY THE APPELLAN T IS JUSTIFIED AS SIMILAR COST OF PRODUCTION HAS BEEN SHOWN BY OTHER MORE THAN 15 COMPANIES MANUFACTURING THE SAME PRODUCTS IN JALNA INDUSTRIAL ESTATE SINCE 1985. 5 (12) THE ADDITION ON ACCOUNT OF CLANDESTINE REMOVAL OF MS INGOTS/BILLETS IN THE YEARS UNDER APPEAL HAS BEEN A GREED ONLY TO PURCHASE PEACE OF MIND AND TO AVOID LITIGATION. 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE RIVAL CONTENTIONS RAISED BY THE APPELLANT IN PARA-7.1 ABO VE AND RAISED BY THE A.O. MENTIONED IN PARA-5 ABOVE. ON PERUSAL OF THE SAME, IT HAS BEEN OBSERVED AS UNDER (1) THE APPELLANT HAS CLANDESTINELY REMOVED MS INGO TS/BILLETS AND HAS EVADED EXCISE DUTY AND HAS NOT ACCOUNTED FOR THE SA ID SALE OF MS INGOTS/BILLETS AS IS EVIDENT FROM THE INVESTIGATION AND ENQUIRIES MADE BY DIRECTOR GENERAL OF CENTRAL EXCISE INTELLIGENCE (DGCEI). (2) THE APPELLANT HAS ALSO ADMITTED THE SAID CLANDE STINE REMOVAL OF GOODS IN THE STATEMENT RECORDED IN INVESTIGATION BY DGCEI AND ALSO BEFORE THE SETTLEMENT COMMISSION OF CUSTOMS AND EXC ISE DEPARTMENT AND HAS PAID EXCISE DUTY AND THE SETTLEMENT COMMISS ION HAS LEVIED TOKEN PENALTY IN RESPECT OF THE SAID CLANDESTINE SA LE OUT OF THE BOOKS. (3) THE COMMISSIONER OF EXCISE IN HIS ORDER AND THE A.O. HAVE REASONABLY ESTIMATED, AFTER CONSIDERING VARIOUS REP ORTS AND STUDIES IN RESPECT OF ELECTRICITY CONSUMPTION REQUIRED FOR PRO DUCING MS INGOTS/BILLETS, AT 1026 ELECTRICITY UNITS PER METRI C TON. (4) THE A.O. HAS ALSO POINTED OUT THAT THERE IS SUB STANTIAL VARIATION IN VARIOUS MONTHS AND IN RESPECT OF VARIOUS MANUFACTUR ERS OF MS INGOTS/BILLETS IN ELECTRICITY CONSUMPTION REQUIRED FOR THE QUANTUM OF GOODS PRODUCED, WHICH IS ABNORMAL. THE A.O. HAS ALS O NOTED SUBSTANTIAL VARIATION IN YIELD AND SHORTAGES DURING VARIOUS MONTHS IN THE YEARS UNDER APPEAL. (5) THE DECISION IN THE CASE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TT J 627 (PUNE) HAS BEEN RELIED ON BY THE APPELLANT. THE FACTS BEFORE T HE HON'BLE ITAT WHILE DECIDING THE SAID CASES WERE 'AFFERENT TO SOM E EXTENT. IN THE SAID CASES, CLANDESTINE REMOVAL OF GOODS BY THE APP ELLANT AND THE ADMISSION OF THE APPELLANT ABOUT THE SAID FACT OF U NACCOUNTED TRANSACTIONS WAS NOT BEFORE THE HON'BLE ITAT. FURTH ER, THE DETAILED ORDER OF THE COMMISSIONER OF EXCISE AND THE OTHER F ACTS BROUGHT ON RECORD BY THE A.O. IN THE ASSESSMENT ORDER WAS NOT BEFORE THE HON'BLE ITAT, PUNE WHILE DECIDING THE ABOVE REFERRED CASES. FURTHER IN THE SAID CASES ACTION U/S 132 WAS CONDUCTED AND THE APP ELLANT WAS ASSESSED U/S 153A OF THE ACT AND HENCE ADDITION IN RESPECT OF COMPLETED ASSESSMENTS IN SUCH CASES COULD BE MADE O NLY ON THE BASIS OF MATERIAL FOUND IN SEARCH ACTION. IN VIEW O F THE ABOVE FACTS, THE RELIANCE PLACED BY THE APPELLANT ON THE ABOVE REFER RED DECISION IS MISPLACED. FURTHER, THE OTHER DECISIONS RELIED ON B Y THE APPELLANT IN SUPPORT OF ITS ABOVE CONTENTION ARE ALSO DISTINGUIS HABLE ON FACTS AS IN THE SAID CASES THE CLANDESTINE REMOVAL OF GOODS WAS NOT PROVED AND ADMITTED AS IN THE CASE OF THE APPELLANT. FURTHER, THE REASONS FOR ESTIMATING THE PRODUCTION ON THE BASIS OF ELECTRICI TY UNITS CONSUMED WERE NOT PRESENT IN THE SAID CASES. (6) THE CONTENTION OF THE APPELLANT THAT THE BOOKS OF ACCOUNTS ARE REGULARLY MAINTAINED AND AUDITED CANNOT BE ACCEPTED IN VIEW OF THE CLANDESTINE REMOVAL OF GOODS AND THE UNACCOUNTED PU RCHASES AND SALES ADMITTED BY THE APPELLANT AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A.O. IN THE ASSESSMENT ORDER. (7) THE APPELLANT HAS NOT MAINTAINED INFORMATION IN FORM NO.G-7, WHICH IS COMPULSORY, SHOWING DAILY CONSUMPTION OF POWER I N UNITS. (8) THE FACTS OF THE DECISIONS RELIED ON BY THE APP ELLANT ARE DIFFERENT AND RATIO LAID DOWN BY THE SAID DECISIONS IN THE CA SE OF ACIT VS. SRJ PEETY STEELS PVT. LTD./SHREE OM ROLLING MILLS PVT. LTD. (2011) 137 TTJ 627 (PUNE) IN RESPECT OF GROSS PROFIT ADDITION CAN ONLY BE APPLIED WITH SOME ALTERATION CONSIDERING THE FACT OF THE CASE OF THE APPELLANT. 6 (9) THE VARIOUS MANUFACTURERS OF MS INGOTS/BILLETS HAVE FILED PETITION FOR STAY OF RECOVERY OF EXCISE ON ALLEGED UNDISCLOSED P RODUCTION SOLD BEFORE HON'BLE CESTAT. THE HON'BLE APPELLATE TRIBUN AL, WEST ZONAL BENCH HAS PASSED ORDER DATED 01/03/2011 ON THE SAID STAY PETITION. IN THIS ORDER, THE HON'BLE APPELLATE TRIBUNAL HAS OBSE RVED THAT THE FACTS OF THE CASE INCLUDING R.A. CASTINGS RELIED ON BY THE A PPLICANTS CANNOT BE FOLLOWED AS PRECEDENT AS IN THE SAID CASE NO CORROB ORATIVE EVIDENCE WAS FOUND BY THE BENCH. THE HON'BLE APPELLATE TRIBU NAL HAS FURTHER OBSERVED THAT THE CRUCIAL EVIDENTIARY FINDINGS HAVE BEEN NOTED IN THE CASES OF THE APPLICANTS INCLUDING THE APPELLANT. TH E SAID FINDINGS IN THE CASE OF - THE APPELLANT ARE AS UNDER '(A) COST OF ELECTRICITY AND RAW MATERIAL SHOWN TO BE 125% OF SELLING PRICE OF INGOTS. (B) SANCTIONED AUXILIARY LOAD WAS ONLY 7. 8% OF THE TOTAL SANCTIONED LOAD BUT CLAIMED TO BE 25% BY APPELLANT IN STATEMENT; (C) COMMISSIONER OF INCOME TAX (APPEALS)' CONFIRMED NET ADDITION OF INCOME OF RS.23.5 LAKHS ON ACCOUNT OF S UPPRESSED PRODUCTION OF INGOTS FOR ASSESSMENT YEARS 2001 -02 TO 2006-07. (D) CLANDESTINE CLEARANCE FOR SPECIFIC CASE ADMITTE D BEFORE SETTLEMENT COMMISSION. SIMILAR OBSERVATIONS HAVE BEEN MADE BY THE HON'BLE APPELLATE TRIBUNAL IN THE CASE OF OTHER MANUFACTURERS. THE HON'BLE CESTAT HAS ALSO TAKEN SUPPORT OF DECISI ON OF HON'BLE MADRAS HIGH COURT IN THE CASE OF ALAGAPPA CEMENT PV T. LTD. VS. CEGAT & CCE, TRICHY (2010-TIOL-770-HC-MAD-CX) AND HELD TH AT THE REVENUE CANNOT BE FAULTED FOR DEMANDING DUTY ON THE STEEL I NGOTS WHICH COULD HAVE BEEN MANUFACTURED BY CONSUMING EXCESS QUANTITY OF ELECTRICITY. THE HON'BLE APPELLATE TRIBUNAL HAS HELD IN CONCLUDING P ARA-22 THAT 'NONE OF THE APPELLANTS EXCEPT M/S SHREE STEEL CASTINGS HAS MADE OUT THE PRIMA- FACIE CASE ON MERITS. THEY CANNOT RAISE A VALID PLE A OF LIMITATION EITHER. SUPPRESSION OF RELEVANT FACTS IS INBUILT IN CLANDES TINE PRODUCTION OF EXCISABLE GOODS AND ITS REMOVAL WITHOUT PAYMENT OF DUTY, AND THE SAME, PRIMA-FACIE, STANDS ESTABLISHED IN THESE CASES.' 7.3 IN VIEW OF THE FACTS OF THE CASE AND ABOVE MENT IONED REASONS MENTIONED BY THE A.O. AND RESPECTFULLY CONSIDERING OBSERVATIONS IN THE DECISION OF CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH ORDER 01/03/2011 IN THE CASE OF THE APP ELLANT AND OTHERS, I HOLD THAT THERE IS SUPPRESSION OF SALE AND PROFIT I N THE YEARS UNDER APPEAL AND HENCE THE PROFIT DECLARED BY THE APPELLANT CANN OT BE ACCEPTED WITHOUT MAKING FURTHER ADDITION ON ACCOUNT OF PROFIT ON SUP PRESSED SALE. 7.4 IN VIEW OF THE ABOVE FACTS, OBSERVATIONS AND DI SCUSSION AND ALSO IN VIEW OF VARIOUS REASONS MENTIONED BY THE A. O. IN THE ASSESSMENT ORDER, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS JUSTIFIED IN ARRIVING AT THE SUPPRESSED PRODUCTION/SALE OF MS INGOTS/BILLETS ON THE BASIS OF ELECTRICITY UNIT CONSUMPTION. THE FIRST ISSUE IS, T HEREFORE, DECIDED AGAINST THE APPELLANT. 4. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE A S WELL AS THE REVENUE ARE IN APPEAL BEFORE US BY TAKING THE FOLLOWING GROUNDS : 7 GROUNDS IN ITA NO.282/PN/2012 -M/S. META ROLLS AND COMMODITIES PVT. LTD. (A.Y. 2009-10) : 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES OF RS. 26,56 ,16,378/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF SALES MERELY O N THE BASIS OF THE ORDER PASSED BY THE COMMISSIONER OF CENTRAL EXCISE AND C USTOMS, AURANGABAD AND ON THE BASIS OF EVASION OF EXCISE DUTY B Y STEEL MANUFACTURERS IN JALNA CLUSTER, FOUND BY DIRECTORATE GENERAL OF CENTRAL EXCISE AND CUSTOMS (DGCEI). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE SUPPRESSION OF SALES OF RS. 26,56,16,37 8/- ON THE BASIS OF THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE AND CU STOMS, AURANGABAD WHEREIN THEY HAVE RELIED ON THE CONSUMPTION OF ELECT RICITY VIS-A-VIS PRODUCTION ON THE BASIS OF AN ARTICLE WRITTEN BY DR. N. K. BATRA, PROFESSOR OF IIT, KANPUR I.E. ON PRESUMPTION AND ASSUMPTION AND WIT HOUT ANY EVIDENCE OF PURCHASE OF RAW MATERIAL OR SALES OF FINISHED PRODUC TS OUT OF BOOKS. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ALLEGED SUPPRESSION OF PRODUCTION ON THE GROUNDS OF MONTHLY VARIATION IN CONSUMPTION OF ELECTRICITY VIS- A-VIS PRODUCTION. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN HO LDING THAT THE BOOKS OF ACCOUNTS OF THE APPELLANT COMPANY ARE CORRECTLY R EJECTED U/S. 145 OF THE INCOME TAX ACT WITHOUT ANY EVIDENCE OR FINDING AS TO HOW THE PROVISIONS OF SECTION 145(3) ARE SATISFIED. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FU RTHER ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MA KING AN ADDITION ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES WITHOUT GIVING A NY SHOW CAUSE NOTICE TO THE APPELLANT COMPANY TO EXPLAIN THE FACT S AGAINST THE PROPOSED HUGE ADDITION ON THIS ACCOUNT WHICH IS AGAINST THE RUL ES OF NATURAL JUSTICE. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF GROSS PROFIT @ 4% ON THE ALLEGED SUPPRESSION OF SALE OF RS. 26,56,16,378/-. 8. THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) FURTHER ERRED IN NOT FOLLOWING THE ORDER OF THE HON. INCOME TAX APPE LLATE TRIBUNAL IN THE CASE OF M/S. THE SRJ PEETY STEELS PVT. LTD. FOR ASSESSMENT YEARS 2000-01 TO 2006-07 REPORTED IN 137 TTJ (PUNE) 627, WHEREIN THE SIMILAR ADDITION WAS DELETED. 9. THE APPELLANT COMPANY CRAVES TO ADD TO, AL TER OR AMEND THE FOREGOING GROUNDS, WHICH ARE WITHOUT PREJUDICE TO ON E ANOTHER, AT THE TIME OF HEARING. GROUNDS IN ITA NO.411/PN/2012 ACIT, CIRCLE-1, AUR ANGABAD (A.Y. 2009-10) : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE CIT(A) WAS JUSTIFIED IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% EVEN AFTER ACCEPTING THE FACT THAT THE ASSESSEE INDULGED IN CLANDE STINE REMOVAL OF GOODS WITHOUT PAYMENT OF TAXES 8 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WH ETHER THE CIT(A) WAS JUSTIFIED IN NOT APPRECIATING THE FACT THAT MANUF ACTURING AND ADMINISTRATIVE EXPENSES ON THE UNACCOUNTED PRODUCTION WORKED OUT IN THE APPELLATE ORDER HAD ALREADY BEEN BORNE BY THE PRODU CTION SHOWN IN THE BOOKS OF ACCOUNTS? 3. THE ORDER OF THE AO BE RESTORED AND THAT OF THE CIT(A) BE VACATED. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY GROUNDS OF APPEAL. 5. BOTH THE SIDES FAIRLY AGREED THAT THE ARGUMENTS ADVANCED IN TH E CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. AND OTHER CONNECTED APPEALS FOR A.Y. 2009-10 SHALL HOLD GOOD FOR THESE APPEALS. 6. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN T HE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. VS. ACIT AND VICE-VERSA V IDE ITA NO. 1212/PN/2012 & ITA NO.1478/PN/2012 ORDER DATED 15-07 -2015 (TO WHICH BOTH OF US ARE PARTIES). WE FIND THE TRIBUNAL AFTER C ONSIDERING THE SUBMISSIONS MADE BY BOTH THE SIDES SET ASIDE THE OR DER OF CIT(A) HOLDING THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQUENT TO ERRATIC CONSUMPTION OF ELECTRICITY. THE RELEVANT OBSERVATION OF THE TRIBUNAL FROM PARA 9 ONWARDS READ AS UNDER : 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED IN THE PRESENT SET OF APPEALS RELATING TO ASSESSMENT YEAR 2009-10 IS IDENTICAL TO THE ISSUE RAISED IN THE EARLIER APP EALS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 IN THE CASE OF DIFFERENT A SSESSEES. WE HAVE BY ORDER OF EVEN DATE ALREADY ADJUDICATED THE ISSUE OF ADDITION IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRESSED PRODUCTION/SA LES ON THE BASIS OF ERRATIC ELECTRICITY CONSUMPTION. IN THE FACTS RELE VANT TO ASSESSMENT YEAR 2009- 10, THE ASSESSEE WAS HELD TO HAVE CLANDESTINELY MAN UFACTURED AND CLEARED ITS MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IN TURN RE LYING ON THE INVESTIGATION CONDUCTED AGAINST THE FURNACE COMPANIES IN THE EARL IER YEARS. THE CCE, AURANGABAD HAD MADE THE ADDITION IN THE HANDS OF TH E ASSESSEE ON THE BASIS OF THE STUDY CONDUCTED BY DR.N.K. BATRA, PROFESSOR, IIT, KANPUR AND AS PER HIS STUDY REPORT FOR MANUFACTURING ONE MT OF MS INGOT, ELECTRICITY SHOULD BE CONSUMED FROM 555 UNITS TO 1046 UNITS. HOWEVER, TH E ASSESSEES WERE SHOWING MORE CONSUMPTION OF ELECTRICITY FOR PRODUCT ION PER MT. THE CCE, AURANGABAD RAISED THE DEMANDS BY CONFIRMING THE ORD ER OF ADJUDICATING AUTHORITY. HOWEVER, IN THE CASE OF DIFFERENT ASSES SEES TRIALS / EXPERIMENTS WERE CONDUCTED IN THE FACTORY OF MOST OF THE APPELL ANTS AND ON SUCH EXPERIMENTS / TRIALS, THE CONSUMPTION OF ELECTRICIT Y WAS FOUND TO BE MORE THAN 1026 UNITS PER MT. IN VIEW THEREOF, THE FACTS OF T HE PRESENT CASE ARE AT 9 VARIANCE TO THE FACTS BEFORE THE TRIBUNAL IN ASSESS MENT YEARS 2006-07 AND 2007-08 WHEREIN THE CASE OF THE EXCISE AUTHORITY WA S THAT THE CONSUMPTION OF ELECTRICITY WAS NOT IN ACCORDANCE WITH THE REPORT O F DR. BATRA. HOWEVER, THE SAID FACTUAL ASPECT HAS BEEN OVERTURNED BY THE INVE STIGATION CARRIED OUT BY THE EXCISE AUTHORITY AT THE PREMISES OF THE ASSESSEE ON DIFFERENT DATES AS MENTIONED HEREINABOVE AND THE FINDINGS OF THE AUTHO RITY WERE AS UNDER :- SR. NO. APPEAL NO. MANUFACTURER APPELLANT PERIOD OF DISPUTE DUTY AMOUNT AND PENALTY DETAILS OF EXPERIMENT 1. E/86268/20 14 SRJ PEETY STEEL PVT. LTD. JANUARY 2008 TO MARCH 2009 RS.12,41,64, 392 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 4.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1496 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 2. E/86151/20 14 BHAGYALAXMI STEEL ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.5,91,23,1 93 & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1503.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 3. E/86275/20 14 MAHAVEER STEEL RE-ROLLING MILLS APRIL 2008 - MARCH 2009 RS.79,74,603 /- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1209 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 4. E/86152/20 14 REGENT STEEL PVT. LTD. FEBRUARY 2008 TO MARCH 2009 RS.96,27,516 /- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 19.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1199 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 5. E/86348/20 14 JAILAXMI CASTING & ALLOYS PVT. LTD. 2008-09, 2009-10 (UP TO JULY 2009) RS.1,92,94,5 75/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 18.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1147.74 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 10 6. E/86249/20 14 GAJLAXMI STEEL PVT. LTD. FEBRUARY 2008 TO MARCH 2009 RS.2,76,52,8 05/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1433.78 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 7. E/86242/20 14 KALIKA STEEL & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,19,92,2 92/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 25.1.2009 SHOWED ELECTRICITY CONSUMPTION OF 1371.5 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 8. E/86330/20 14 META ROLLS & COMMODITIES PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,26,84,3 18/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 20.3.2009 SHOWED ELECTRICITY CONSUMPTION OF 1251 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 9. E/86220/20 14 NILESH STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.2,06,54,2 92/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION ON 22.2.2009 SHOWED ELECTRICITY CONSUMPTION OF 1253 UNITS PER MT USING MIX INPUT OF SCRAP AND SPONGE IRON. 10. E/86349/20 14 OM SAIRAM STEEL & ALLOYS PVT. LTD. APRIL 2008 TO MARCH 2009 RS.3,90,21,9 47/- & EQUAL PENALTY SPECIFIC VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE ON 25.3.2009; HOWEVER COPY THEREOF WAS NOT GIVE TO APPELLANT. 11. E/86331/20 14 SAPTASHRUNGI ALLOYS (P) LTD. APRIL 2008 TO MARCH 2009 RS.1,61,53,0 31/- & EQUAL PENALTY NO VERIFICATION OF ELECTRICITY CONSUMPTION WAS DONE DURING THE RELEVANT PERIOD. 10. THE DIVISION BENCH OF CESTAT HAD SET-ASIDE THE ORDER OF THE CCE, AURANGABAD ON ACCOUNT OF ADDITIONS MADE IN THE HAND S OF THE ASSESSEE BECAUSE OF ERRATIC CONSUMPTION OF ELECTRICITY. THE RELEVANT FINDING OF THE ORDER OF CESTAT READS AS UNDER :- 11 IN THE IMPUGNED ORDER THE ADJUDICATING AUTHORITY H AS NOT CONSIDERED THE SPECIFIC VERIFICATION CONDUCTED BY THE DEPARTMENTAL OFFICERS, WHO ASCERTAINED THE ACTUAL CONSUMPTION OF ELECTRICITY TO MANUFACTUR E OF 1MT OF MS INGOTS IS MORE THAN 1026 UNITS FOR PER MT AS ALLEGED IN THE S CNS, WHEN THE APPELLANTS HAVE SPECIFICALLY TAKEN THIS DEFENSE. IN FACT, THE SPECIFIC INSPECTION/EXPERIMENT WHICH HAS BEEN CONDUCTED TO A SCERTAIN THE ELECTRICITY CONSUMPTION TO MANUFACTURE 1MT OF MS INGOTS IS VITA L EVIDENCE, WHICH HAS NOT BEEN CONSIDERED BY THE ADJUDICATING AUTHORITY. IF THE PHYSICAL VERIFICATION REPORT CONDUCTED BY THE REVENUE WOULD HAVE BEEN TAK EN INTO CONSIDERATION BY THE ADJUDICATING AUTHORITY, THEN THE ADJUDICATIN G AUTHORITY WAS NOT REQUIRED TO CONSIDER THE OTHER EVIDENCES. MOREOVER, ALL THE EVIDENCES RELIED UPON BY THE LD. ADJUDICATING AUTHORITY ARE THEORETICAL AND HAVE BEEN CONSIDERED BY THIS TRIBUNAL IN APPELLANTS OWN CASES FOR THE EARL IER PERIOD; WHEREIN THIS TRIBUNAL RELIED ON THE DECISION OF R.A. CASTING PVT . LTD. VS. CCE, MEERUT REPORTED IN 2009 (273) ELT 674 AND HELD THAT ON THE BASIS OF STUDY REPORT OF DR. N.K. BATRA, THE ELECTRICITY CONSUMPTION CANT B E THE BASIS FOR DEMANDS. THE ORDER OF THIS TRIBUNAL WAS CHALLENGED BY THE RE VENUE BEFORE THE HONBLE HIGH COURT AND THE HONBLE HIGH COURT OF ALLAHABAD VIDE ORDER DT. 9.9.2010 IN APPEAL NO.67/2009 DISMISSED THE APPEAL FILED BY THE REVENUE, AND AGAINST THE DECISION OF THE HONBLE HIGH COURT, THE REVENUE FILED SLP BEFORE THE HONBLE APEX COURT AND THE HONBLE SUPREME COURT AL SO DISMISSED THE SLP VIDE ORDER DT. 31.3.2011. THEREAFTER, THE REVENUE SOUGHT TO FILE REVIEW PETITION, BUT THE THEN ATTORNEY GENERAL OF INDIA, T HE SHRI GOUTAM VAHANVATI OPINED NOT TO FILE REVIEW PETITION VIDE LETTER NO.2 76/417/2010 CX 8A DATED 26.05.2011. THEREFORE, THE RELIANCE ON THE STUDY A NALYSIS CONDUCTED BY DR. N.K. BATRA, PROFESSOR IIT KANPUR, IS NOT AN EVIDENC E TO ASCERTAIN THE ELECTRICITY CONSUMPTION FOR MANUFACTURE OF 1MT OF MS INGOTS. 7. IN APPELLANTS OWN CASE FOR THE EARLIER PERIOD ON THE BASIS OF THE EVIDENCE RELIED UPON BY THE ADJUDICATING AUTHORITY, TRIBUNAL CAME TO THE CONCLUSION THAT THE 1026 UNITS OF ELECTRICITY FOR M ANUFACTURE OF 1MT OF MS INGOTS IS NOT CORRECT AND SET ASIDE THE ADJUDICATIO N ORDERS. IN THE CASES IN HAND THERE IS ADDITIONAL EVIDENCE OF SPECIFIC VERIF ICATION/TRIAL CONDUCTED BY THE REVENUE TO ASCERTAIN THE ACTUAL ELECTRICITY CONSUMP TION WHICH WORKS OUT TO MORE THAN 1026 UNITS OF ELECTRICITY CONSUMPTION PER 1MT OF MS INGOTS. THEREFORE, RELYING ON THE DECISION OF THE EARLIER P ERIOD IN APPELLANTS OWN CASES AND THE ADDITIONAL EVIDENCES, COLLECTED BY WA Y SPECIFIC VERIFICATION, WE HOLD THAT IMPUGNED ORDERS ARE NOT LEGAL AND PROPER WHEREAS DURING THE IMPUGNED PERIOD, THE PHYSICAL VERIFICATION WAS COND UCTED AND THE ELECTRICITY CONSUMPTION FOR MANUFACTURE OF 1MT OF MS INGOTS WAS FOUND TO BE MORE THAN 1026 UNITS OF ELECTRICITY. 8. IN THESE CIRCUMSTANCES, WE SET ASIDE THE IMPUGNE D ORDERS AND ALLOW THE APPEALS WITH CONSEQUENTIAL RELIEF AND STAY APPL ICATIONS ARE ALSO DISPOSED OF IN THE ABOVE TERMS. 11. THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTIO N MADE IN THE HANDS OF THE ASSESSEE WAS DELETED BY THE DIVISION BENCH O F CESTAT VIDE ORDER DATED 22.10.2014, WHEREIN ON SPECIFIC INSPECTION / EXPERIMENTS BY THE AUTHORITIES, CONDUCTED TO ASCERTAIN THE ELECTRICITY CONSUMPTION TO MANUFACTURE ONE MT FOUND THAT THE CONSUMPTION OF ELECTRICITY WA S MORE THAN 1026 UNITS PER MT. THE CASE OF THE EXCISE DEPARTMENT WAS THAT 1026 UNITS PER MT WERE REQUIRED TO MANUFACTURE ONE MT OF MS INGOTS / BILLE TS AND THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE IN THIS REGARD. HOWEVER, SINCE THE PHYSICAL VERIFICATION CONDUCTED BY THE EXCISE DEPARTMENT REF LECTED HIGHER CONSUMPTION OF ELECTRICITY, THE TRIBUNAL CAME TO A FINDING THAT IN VIEW OF THE ADDITIONAL EVIDENCES OF SPECIFIC VERIFICATION / TRIAL CONDUCTE D BY THE REVENUE TO ASCERTAIN THE ACTUAL ELECTRICITY CONSUMPTION, WHICH WORKED OU T TO MORE THAN 1026 UNITS PER MT, THERE WAS NO BASIS FOR MAKING ANY ADDITION IN THE HANDS OF THE 12 ASSESSEE. THE TRIBUNAL ALSO REFERRED TO ITS EARLIE R ORDER IN THE CASE OF DIFFERENT ASSESSEES, WHERE SIMILAR ADDITION WAS DELETED. 12. THE TRIBUNAL IN BUNCH OF APPEALS WITH LEAD ORDE R IN ITA NOS.284 TO 286/PN/2012 RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. VS. ADDL.CIT AND CROSS APPEAL FILED BY THE REVENUE IN ITA NOS.437 TO 439/PN/2012 RELATING TO A SSESSMENT YEARS 2006- 07 TO 2008-09 ALONG WITH OTHER CONNECTED APPEALS WH ILE DECIDING THE ISSUE OF ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION BECAUS E OF ERRATIC CONSUMPTION OF ELECTRICITY, HELD AS UNDER :- 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE LD. AR FOR THE ASSESSEE FILED ARGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTES OF HIS ARGUMENT WHICH ARE PLAC ED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RE LIED ON BY BOTH THE PARTIES. 18. BEFORE ADDRESSING THE ISSUE ON MERITS, WE WOULD LIKE TO MAKE A MENTION OF THE PROCEEDINGS BEFORE THE BENCH OF THE PRESENT CASES LISTED BEFORE US, WHICH WERE MADE VIDE ORDER SHEET ENTRY D ATED 07.05.2015. THE PRESENT APPEALS WERE FIXED FOR HEARING INITIALLY ON 10.03.2015 AND WERE ADJOURNED AT THE REQUEST OF THE SPECIAL AR FOR THE REVENUE AS HE WAS NOT READY TO ARGUE THE APPEALS. THE REASONS STATED IN THE LETTER DATED 10.03.2015 FOR SEEKING ADJOURNMENT I.E. CONTEMPLATION OF FILIN G MA AGAINST THE EARLIER ORDERS OF THE TRIBUNAL, WAS REJECTED. THE APPEALS WERE ADJOURNED TO 13.03.2015 AND THEN 05.05.2015 AT THE REQUEST OF TH E SPECIAL AR. ON 05.05.2015, THE COUNSEL FOR THE ASSESSEE OPENED HIS ARGUMENTS WHICH WERE REPLIED TO BY SPECIAL AR FOR THE REVENUE. ON 05.05 .2015 ITSELF, THE SPECIAL AR FILED WRITTEN SUBMISSIONS ALONGWITH COMPILATION OF CASE LAWS AND THE MATTER WAS ADJOURNED TO 07.05.2015 FOR FURTHER HEAR ING. ON 07.05.2015, THE CASE WAS TAKEN UP IN THE PRE-LUNCH HOUR AND WAS ARG UED AT LENGTH BY THE SPECIAL AR FOR THE REVENUE. THE COUNSEL FOR THE AS SESSEE STRONGLY OPPOSED THE SAME ON THE GROUND THAT THE SPECIAL AR FOR THE REVENUE HAD CONCLUDED HIS ARGUMENTS ON EARLIER DATE AND TODAY THE MATTER WAS FIXED FOR HIS REJOINDER. THE HEARING COULD NOT BE CONCLUDED IN THE PRE-LUNCH HOUR SESSION AND IT WAS DIRECTED THAT THE HEARING WOULD CONTINUE AT 03:00 P M I.E. AFTER THE LUNCH HOUR TO WHICH BOTH THE PARTIES CONSENTED. ON REASSEMBLI NG OF THE BENCH, THE SPECIAL AR FOR THE REVENUE FURNISHED LETTER UNDER H IS SIGNATURE STATING THAT THE PR.CIT, AURANGABAD WAS CONTEMPLATING TO FILE CE RTAIN PETITIONS BEFORE THE HONBLE PRESIDENT/VICE PRESIDENT, ITAT, MUMBAI AND THEREFORE THE MATTER SHOULD BE ADJOURNED FOR THREE WEEKS. HOWEVER, THE NATURE AND CONTENTS OF THE PETITION CONTEMPLATED WAS NOT MADE KNOWN. THE SPECIAL AR FOR THE REVENUE WAS ASKED TO CONTINUE HIS ARGUMENTS BY THE BENCH, BUT HE REFERRED TO HIS ADJOURNMENT LETTER. 19. THE COUNSEL FOR THE ASSESSEE STARTED HIS ARGUME NT. HOWEVER, THE SPECIAL AR FOR THE REVENUE WALKED OFF FROM THE COUR T ROOM. THE COUNSEL FOR THE ASSESSEE ALSO FURNISHED WRITTEN REJOINDER IN RE PLY TO THE SUBMISSIONS FILED BY THE SPECIAL AR FOR THE REVENUE, PARAWISE WHICH W ERE GONE INTO AT LENGTH. THOUGH, IN THE COURSE OF HEARING, THE SPECIAL AR FO R THE REVENUE LEFT THE COURT PROCEEDINGS, ON THE OTHER HAND, SMT. M.S. VER MA, LD. CIT-DR AND SHRI RAJESH DAMOR, LD. ADDL.CIT-DR WERE PRESENT IN THE C OURT. THEREAFTER, OTHER CASES WHICH WERE TO BE ARGUED BY THE LD. CIT-DR AND LD. ADDL.CIT-DR WERE TAKEN UP FOR HEARING AND THE MATTERS IN ITA NOS.125 , 127, 430 & 431/PN/2012 ALONG WITH ITA NO.1525/PN/2012, ITA NO.1476/PN/2012 , ITA NOS.179 TO 182/PN/2012, ITA NOS.656 TO 659/PN/2012, ITA NO.108 4/PN/2012, ITA NO.1468/PN/2012, ITA NO.1558/PN/2012, ITA NO.1629/P N/2012, ITA NO.1516/PN/2012 AND ITA NO.1638/PN/2012 WERE HEARD. ALL THE OTHER APPEALS ARE ADJOURNED TO 08.05.2015 AS PART HEARD. 20. ON 08.05.2015, ON CALLING OF THE MATTERS, WE FI ND THAT THE LD. SPECIAL AR IS NOT PRESENT IN THE COURT ROOM AND THERE IS NO INTIMATION ABOUT HIS ABSENCE IN THE BUNCH OF MATTERS, WHICH ARE LISTED F OR HEARING. THE CIT-DR WAS PRESENT AND WAS ASKED TO EXPLAIN HIS ABSENCE. IN REPLY SHE STATED THAT SHE HAD NO INTIMATION. IN VIEW OF CONTINUED DEFIAN CE OF THE LD. SPECIAL AR IN YESTERDAYS HEARING AND HIS NON-APPEARANCE IN TODAY S HEARING, CONDUCT OF THE 13 LD. SPECIAL AR IS TO BE TAKEN NOTE OF. THE CIT-DR WAS INFORMED IN THE BENCH AS TO WHY COSTS SHOULD NOT BE IMPOSED ON THE DEPART MENT FOR HIS CONTINUED DEFIANCE AND FOR INTERRUPTING PROCEEDINGS OF THE BE NCH. THE HEARING IS TO CONTINUE IN THE LISTED MATTERS AS ANNEXED ON 13.05. 2015 AS PART-HEARD. 21. ON 13.05.2005, SHRI J.P. BAIRAGRA WAS PRESENT F OR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SHRI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. THE MATTER WAS FINALLY HEARD ON 14.05.2015 WHEN SHRI J.P. BAIRAGRA PRESENT FOR THE ASSESSEE AND SHRI SUNIL GANOO, LD. SPECIAL AR, SMT. M.S. VERMA, CIT-DR & SH RI RAJESH DAMOR WERE PRESENT FOR THE DEPARTMENT. 22. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, BUT THE ISSUES RAISED BY THE ASSESSE ARE FOUR-FOLD ON THE F OLLOWING ACCOUNTS:- A) REOPENING OF ASSESSMENT UNDER SECTION 147 AND NO N-SUPPLY OF REASONS FOR REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; B) NON-ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT AFTER REOPENING THE ASSESSMENT UNDER SECTION 147 OF THE ACT; AND C) ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF SALES ON THE BASIS OF CONSUMPTION OF ELECTRICITY AS PER US STANDARDS A ND EVASION OF EXCISE DUTY BY THE MANUFACTURERS OF TMT BARS IN JAL NA CLUSTER FOUND BY DIRECTOR GENERAL OF CENTRAL EXCISE AND CUSTOMS; AND WORKING OUT THE ADDITION BY APPLYING GP RATE OF 4% ON THE ALLEG ED SUPPRESSION OF SALES, AFTER REJECTING THE BOOKS OF ACCOUNT UNDER S ECTION 145 OF THE ACT. D) ADDITION MADE ON ACCOUNT OF INVESTMENT IN PURCHA SES RELATING TO SUPPRESSION OF SALE. 23. THE REVENUE ON THE OTHER HAND, IS IN APPEAL AGA INST THE ORDER OF CIT(A) ON THE FOLLOWING GROUNDS:- A) IN QUANTIFYING THE SUPPRESSED PRODUCTION @ 4% AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE TOT AL SUPPRESSED PRODUCTION, WHERE THE ASSESSEE WAS FOUND TO BE INDU LGING IN CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXC ISE DUTY; AND B) ALLOWABILITY OF MANUFACTURING AND ADMINISTRATIVE EXPENSES ON THE UN- ACCOUNTED PRODUCTION WORKED OUT BY THE ASSESSING OF FICER. 24. THE STEEL GROUP OF CASES WERE HEARD FROM DAY-TO -DAY ON VARIOUS DATES AND THE ARGUMENTS OF BOTH THE LEARNED AUTHORIZED RE PRESENTATIVE FOR THE ASSESSEE AND THE LD. SPECIAL AR WERE HEARD ALONG WI TH WRITTEN SUBMISSIONS, NOTES FILED BY THEM AND THE COMPILATION OF CASE LAW S RELIED UPON BY THE RESPECTIVE AUTHORIZED REPRESENTATIVES. IT MAY BE P UT ON RECORD THAT THE ISSUES RAISED BY THE DIFFERENT ASSESSEES BEFORE US ARE RELATABLE TO THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTIO N AND EVASION OF DUTY ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. 25. NOW, WE ARE COMING TO THE MERITS OF THE ISSUE R AISED BEFORE US. WE HAVE HEARD THIS BUNCH OF APPEALS WHERE DIFFERENT IS SUES ARE RAISED I.E. IN SOME CASES WHERE THE ASSESSMENT IS COMPLETED UNDER SECTION 143(3) R.W.S. 148 OF THE ACT, THE ASSESSEE HAS RAISED THE ISSUE A GAINST RE-OPENING OF ASSESSMENT, NON-SUPPLY OF REASONS FOR RE-OPENING UN DER SECTION 147 AND ALSO NON-SERVICE OF NOTICE UNDER SECTION 143(2) AFTER RE CORDING OF REASONS UNDER SECTION 147 OF THE ACT. HOWEVER, IN SOME CASES, TH E ASSESSMENT HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THERE ARE NO ISSUES AGAINST RE- OPENING OF THE ASSESSMENT. THE LD. AUTHORIZED REPR ESENTATIVE FOR THE ASSESSEE IN THE PRESENT BUNCH OF APPEALS RELATING T O BHAGYALAXMI STEEL ALLOYS PVT. LTD. AT THE OUTSET STATED THAT THE GROUNDS OF APPEAL NOS.1, 2 AND 10 IN RELATION TO RE-OPENING OF THE ASSESSMENT UNDER SECT ION 147 AND NON-SUPPLY OF REASONS FOR RE-OPENING UNDER SECTION 147 OF THE ACT , ARE NOT PRESSED. HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 14 26. THE NEXT ISSUE IS THE WORKING OF THE SUPPRESSED PRODUCTION AND THE APPLICATION OF GP RATE OF 4% ON SUCH SUPPRESSED PRO DUCTION AND THIRD IS THE WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUCH SUP PRESSED PRODUCTION. WE FIND THAT SIMILAR ISSUE OF ADDITION ON ACCOUNT SUPP RESSED PRODUCTION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY AROSE BEFORE THE TRIBUNAL IN THE CASE OF SRJ PEETY STEEL PVT. LTD. (SUPRA). THOUGH BOTH THE PARTIES HAVE RAISED THEIR ARGUMENTS IN FAVOUR OF/AGAINST THE ORD ER OF THE TRIBUNAL IN SRJ PEETY STEEL PVT. LTD. (SUPRA), WE FIRST REFER TO TH E DECISION OF THE TRIBUNAL AND THEN MEET WITH THE RESPECTIVE OBJECTIONS OF BOTH TH E AUTHORIZED REPRESENTATIVES. 27. THOUGH THE CASE OF THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE WAS THAT THE ISSUE RAISED IN THE PRESENT A PPEAL WAS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA). HOWEVER, THE LD. SPECIAL AR STRESSED THAT THE ISSUE WAS AT V ARIANCE AND MADE ELABORATE SUBMISSIONS. IT MAY BE PUT ON RECORD THA T M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) IS A CASE OF FURNACE, WHICH IS EN GAGED IN THE MANUFACTURE OF INGOTS / BILLETS. IN THE CASE OF M/S. SRJ PEETY ST EELS PVT. LTD. (SUPRA), THERE WAS AN ORDER OF CENTRAL EXCISE COMMISSIONER, AURANG ABAD IN RELATION TO SUPPRESSION OF PRODUCTION ON ACCOUNT OF ERRATIC CON SUMPTION OF ELECTRICITY. THE ASSESSEE FILED AN APPEAL AGAINST THE SAID ORDER OF CCE, AURANGABAD BEFORE THE CESTAT AND THE THIRD MEMBER OF CESTAT DE LETED THE ADDITION MADE IN THE HANDS OF RESPECTIVE FURNACE CASES. ALS O, IN THE CASE OF THE ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGAB AD AND THERE IS ORDER OF THIRD MEMBER OF CESTAT. IN SOME OF THE YEARS, THE OWNERS OF FURNACE ON THE BASIS OF CERTAIN INFORMATION GATHERED BY THE DGCEI HAD MOVED A PETITION BEFORE THE SETTLEMENT COMMISSION AND OFFERED ADDITI ONAL PRODUCTION, WHICH WAS ACCEPTED BY THE SETTLEMENT COMMISSION IN ENTIRE TY. THE ASSESSING OFFICER OBSERVED THAT THERE WAS SUPPRESSION OF PROD UCTION BY THE FURNACE COMPANIES IN JALNA CLUSTER ON THE GROUND OF VARIANC E IN CONSUMPTION OF ELECTRICITY VERSUS PRODUCTION. THE ASSESSING OFFIC ER ALSO REFERRED TO THE DATA COLLECTED IN THE CASES OF FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD. AND OTHERS AND RELYING ON THE ADDITION MADE IN THE HANDS OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), IN TURN, ON THE BASIS OF THE ORDER OF CCE, AURANGABAD, MADE ADDITIONS IN THE HANDS OF PRESENT SET OF ASSES SES BEFORE US. 28. THE TRIBUNAL HAD ELABORATELY CONSIDERED ALL THE ASPECTS OF ADDITION IN THE HANDS OF THE FURNACE OWNERS I.E. M/S. SRJ PEETY STEELS PVT. LTD., ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IN TURN, WAS THE BASIS FOR MAKING THE ADDITIONS IN THE HANDS OF THE ASSESSEE T HEREIN BY CCE, AURANGABAD AND VIDE ORDER DATED 16.01.2015 HELD THA T SINCE THE ORDER OF THE CCE, AURANGABAD HAS BEEN OVERRULED BY THE THIRD MEM BER OF CESTAT, THERE WAS NO BASIS FOR ADDITION IN THE HANDS OF THE ASSES SEE. THE OTHER ASPECTS OF THE ISSUE THAT THE ASSESSEE THEREIN HAD MADE THE PE TITION BEFORE SETTLEMENT COMMISSION IN RESPECT OF CLANDESTINE REMOVAL OF MAT ERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS ALSO CONSIDERED BY THE TRIBUNAL AN D IN THE ABSENCE OF ANY INQUIRY / INVESTIGATION OR MATERIAL COLLECTED BY TH E ASSESSING OFFICER, THE TRIBUNAL HELD THAT THERE WAS NO MERIT IN ANY ADDITI ON IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 2007-08. FURTHER, IN A SSESSMENT YEAR 2008-09, THERE WAS NO ADMISSION OF ANY CLANDESTINE REMOVAL O F MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMENT COMMIS SION AND IN THE ABSENCE OF ANY OTHER INQUIRY OR INVESTIGATION BEING CARRIED OUT BY THE ASSESSING OFFICER OR ANY OTHER EVIDENCE BEING BROUGHT ON RECORD, THE TRIBUNAL HELD THAT NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. THE ISSUE BEFORE THE TRIBUNAL IN M/S. SRJ PEETY STEELS PVT. LTD. WAS SUM MARIZED UNDER PARA 9, WHICH READS AS UNDER:- 9. AT THIS STAGE WE ARE NOT CONSIDERING THE APPEAL S FILED BY THE REVENUE FOR THE REASON THAT THOSE APPEALS ARE AGAINST THE F INDING OF THE LD. CIT(A) THAT THE ENTIRE VALUE OF ALLEGED SUPPRESSED PRODUCTION/S ALES OF INGOTS AND BILLETS CANNOT BE TREATED AS INCOME OF THE ASSESSEE AND SOM E REASONABLE PERCENTAGE OF THE GROSS PROFIT IS TO BE ESTIMATED. LD. CIT(A), ACCORDINGLY, DIRECTED THE ASSESSING OFFICER TO ADOPT GROSS PROFI T @ 4% ON THE VALUE OF ALLEGED SUPPRESSED PRODUCTION/SALES AND ACCORDINGLY , PARTLY SUSTAINED THE ADDITIONS. NOW, WE FIRST DECIDE THE CORE ISSUE IN THIS CASE 15 (I) ON THE FACTS AND CIRCUMSTANCES OF THIS CASE WHE THER THE ASSESSING OFFICER WAS JUSTIFIED IN MAKING THE ADDITION OF RS.39,20,36 ,546/- IN THE A.Y. 2007-08 AND RS.40,75,72,486/- IN THE A.Y. 2008-09 ON ALLEGE D SUPPRESSION OF PRODUCTION/SALES AND; (II) WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE DOES NOT GIVE THE CORRECT P ICTURE OF THE STATE OF AFFAIRS AND HENCE, THOSE BOOKS OF ACCOUNT NEEDS TO BE REJEC TED. 29. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE IN PARAS 10 TO 10.5 AT PAGES 12 TO 16 AND ALSO SUMMARIZING THE SUBMISSI ONS OF THE LD. SPECIAL AR IN PARAS 11 TO 11.6 AT PAGES 16 TO 22 AND THE RE JOINDER OF THE ASSESSEE IN PARAS 12 TO 12.1 AT PAGES 22 TO 24 OF THE ORDER, TH E TRIBUNAL OBSERVED AS UNDER:- 13. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE RECORD. LD. AR FOR THE ASSESSEE FILED A RGUMENT SYNOPSIS AND LD. SPL. AR FOR THE REVENUE ALSO HAS FILED NOTE S OF HIS ARGUMENT ON 05-11-2014 WHICH ARE PLACED ON RECORD. WE HAVE ALSO CONSIDERED ALL THE PRECEDENTS AND DECISIONS RELIED ON BY BOTH THE PARTIES. THE ASSESSEE IS MANUFACTURER OF INGOTS/BILLETS. SO FAR AS A.Y. 2007-08 IS CONCERNED THE ORIGINAL ASSESSMENT OF THE ASSESSEE W AS COMPLETED U/S. 143(3) OF THE ACT ON 31-12-2009. WHILE COMPLE TING THE ASSESSMENT U/S. 143(3) OF THE ACT, IN THE OPINION O F THE ASSESSING OFFICER THE ELECTRICITY CONSUMPTION SHOWN BY THE AS SESSEE WAS AT HIGHER SIDE AS COMPARED TO THE QUANTUM OF PRODUCTIO N DECLARED BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, MADE T HE ADDITION ON THE BASIS OF THE ALLEGED SUPPRESSION OF THE PRODUCTION/ SALES BY THE ASSESSEE AS IN HIS OPINION THE ASSESSEE SHOULD HAVE DECLARED OR SHOWN MORE PRODUCTION OF THE INGOT/BILLETS. SUBSEQ UENTLY, ON THE BASIS OF THE INFORMATION RECEIVED FROM THE OFFICE OF THE CCE, AURANGABAD VIDE THEIR LETTER DATED 29-03-2010 AS WELL AS ADJUD ICATION ORDER OF CCE QUANTIFYING THE VALUE OF ALLEGED SUPPRESSED PRODUCT ION AND ALLEGED EVASION OF EXCISE DUTY, THE ASSESSING OFFICER INIT IATED THE RE- ASSESSMENT PROCEEDINGS FOR A.Y. 2007-08 AGAINST THE ASSESSEE COMPANY U/S. 147 OF THE ACT. IN REASONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE NOTICE TO THE ASSESSEE CO MPANY U/S. 147 FOR A.Y. 2007-08 THE ASSESSING OFFICER GAVE REFERENCE OF THE COMMUNICATION AND ORDER OF THE CCE AURANGABAD RECEI VED FROM THE CENTRAL EXCISE OFFICE AT AURANGABAD. 14. THE ASSESSING OFFICER HAS ALSO REFERRED TO ONE MATTER IN RESPECT OF THE ACTION CONDUCTED BY DGCE (INTELLIGEN CE) AGAINST THE FEW BROKERS AND SUB-BROKERS WHO WERE INVOLVED IN THE TR ADING INTO THE INGOT/BILLETS AND TMT BARS. THE ASSESSING OFFICER ALSO REFERRED TO THE PETITION FILED BY THE ASSESSEE BEFORE THE CENTRAL E XCISE AND CUSTOM SETTLEMENT COMMISSION, MUMBAI BENCH, MUMBAI FOR WAI VER OF PENALTY, INTEREST AND FOR GETTING IMMUNITY FROM A PROSECUTIO N. THE ASSESSING OFFICER PROCEEDED TO DECIDE THE ALLEGED SUPPRESSION OF PRODUCTION BY THE ASSESSEE ADMITTEDLY WHICH WAS BASED ON THE INFO RMATION RECEIVED FROM CENTRAL EXCISE AUTHORITY AS WELL AS THE ADJUDI CATION ORDER OF THE CCE, AURANGABAD. IT IS PERTINENT TO NOTE HERE THAT IN THIS CASE THAT THERE WAS A SEARCH AND SEIZURE ACTION AGAINST THE A SSESSEE AND ITS GROUP COMPANIES BY THE INCOME-TAX DEPT. ON 17-03-20 06 AND IN CONSEQUENCE OF THE SEARCH AND SEIZURE ACTION U/S. 1 32(1) THE ASSESSMENTS OF THE ASSESSEE HAVE BEEN FRAMED U/S. 1 53A R.W.S. 143(3) FOR THE A.YS. 2000-01 TO 2006-07. IT IS ALS O PERTINENT TO NOTE THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERAT ION NO INCRIMINATING EVIDENCE WAS FOUND SUGGESTING THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AS COMPARED TO THE CONSUMPTION OF THE EL ECTRICITY. NO EXCESS STOCK OF FINISHED GOODS WAS ALSO FOUND. WE ALSO PUT ON RECORD THAT THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IN CONSEQUENCE OF SEARCH AND SEIZURE ACTION AGAINST THE ASSESSEE U /S. 153A R.W.S. 143(3) HAVE REACHED THE HON'BLE JURISDICTIONAL HIGH COURT. WE WILL LATER REFER TO THE DECISION OF THE TRIBUNAL AS WELL AS HON'BLE HIGH COURT 16 AND CERTAIN IMPORTANT OBSERVATIONS MADE IN RESPECT OF THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER. IT IS ALSO TO BE TAKEN NOTE THAT THE A.YS. 2007-08 AND 2008-09 BEFORE US ARE IMMEDIATELY NEXT ASSESSMENT YEARS AFTER THE ASSESSMENTS IN CONSEQUEN CE OF SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE ACT WERE COMP LETED. 15. IT IS ALSO TO BE TAKEN NOTE OF THE FACT THAT EV EN FOR THE A.YS. 2007-08 AND 2008-09, NO INDEPENDENT INVESTIGATION O R ANY ENQUIRY IS MADE BY THE ASSESSING OFFICER OR ANY OTHER INCOME T AX AUTHORITIES. IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS PLAC ED HIS RELIANCE ONLY ON THE INFORMATION RECEIVED FROM THE CENTRAL E XCISE AUTHORITIES AND THE PROCEEDING BEFORE THE SETTLEMENT COMMISSION OF CENTRAL EXCISE & CUSTOM, MUMBAI. THE INVESTIGATION WAS CAR RIED OUT BY CENTRAL EXCISE AUTHORITIES I.E. DGCEI, AGAINST FEW BROKERS/SUB-BROKERS AND THOSE BROKERS GAVE THE NAMES OF MANY COMPANIES WHO ARE IN THE MANUFACTURING OF INGOT/BILLETS AND TMT BARS. AS PE R THE STATEMENT GIVEN BEFORE THE CENTRAL EXCISE AUTHORITIES BY THOS E BROKERS AS WELL AS SUB-BROKERS NAMELY SHRI UMESH MODI, MUMBAI, SHRI AN IL D LINGADE, SHRI MUKESH GUPTA IT WAS ADMITTED THAT THEY WERE IN VOLVED IN CLEARING THE CONSIGNMENTS FROM THE FACTORY ON WEIGHMENT SLIP S ONLY AND NO EXCISE DUTY WAS PAID AND THEY WERE INVOLVED IN PROV IDING FAKE TRADING BILLS AND CHALLANS WHICH ACCOMPANIED THE VEHICLES C ARRYING THOSE CONSIGNMENTS. AS PER THE MODUS OPERANDI ADOPTED BY THE BROKERS THEY USED TO RECOVER THE SAID FAKE TRADING BILLS AN D CHALLANS AFTER THE GOODS REACHED THEIR DESTINATION. AS NOTED BY THE A SSESSING OFFICER THOSE BROKERS/SUB-BROKERS ALSO ADMITTED THAT THE EN TIRE EVIDENCE WAS DESTROYED BY THEM AND THEY USED TO GET THE COMMISSI ON OF RS.100/- PER MT. THE ASSESSING OFFICER HAS DISCUSSED THE IN FORMATION GATHERED BY THE DGCEI, ZONAL UNIT, MUMBAI IN PARA N OS. 2.1, 2.2, 2.3, 2.4, 2.5, 2.6 & 2.7 OF THE ASSESSMENT ORDER. SO FA R AS ACTION AGAINST THE BROKERS AND SUB-BROKERS ARE CONCERNED THE CENTR AL EXCISE AUTHORITY ISSUED SHOW CAUSE TO THE ASSESSEE AS WELL AS THE OTHER MANUFACTURERS WHO WERE INVOLVED IN CLEARING THE EXC ISABLE GOODS WITHOUT PAYMENT OF DUTY. ALL THE MANUFACTURERS OF THE INGOTS/BILLETS AND TMT BARS WERE BASED IN JALNA AND THE ASSESSEE I S ONE OF THEM. AS PER THE INVESTIGATION DONE BY THE CENTRAL EXCISE AUTHORITIES, THE ASSESSEE WHO IS MANUFACTURING OF INGOTS/BILLETS SUP PLIED 288.500 MT. TO SHRI OM ROLLING MILLS PVT. LTD. WHICH IS ENGAGED IN THE MANUFACTURING OF TMT BARS. THE ASSESSING OFFICER A LSO REFERRED TO A STATEMENT OF SHRI SURENDRA S. PEETY, MANAGING DIREC TOR OF THE ASSESSEE RECORDED ON 12-01-2007, BY THE DGCEI WHO A LLEGEDLY ADMITTED THAT THE GOODS SUPPLIED TO SHRI OM ROLLING MILLS PVT. LTD. I.E. INGOTS/ BILLETS, WERE REMOVED CLANDESTINELY WITHOUT PAYMENT OF EXCISE DUTY AND THE SAID MATERIAL WAS TO EXTENT OF 275 MTS . THE SALE PRICE WAS RECEIVED IN CASH FROM SHRI OM ROLLING MILLS PVT . LTD. AND HENCE, THERE WAS NO ACCOUNTING. THE ASSESSEE ADMITTED THE SAID CHARGE OF THE CENTRAL EXCISE AUTHORITIES I.E. DGCEI AND APPRO ACHED THE SETTLEMENT COMMISSION AND PAID THE EXCISE DUTY TO T HE EXTENT OF RS.7,79,313/- FOR CLEARING THE GOODS WITHOUT PAYMEN T OF EXCISE DUTY. THE DECLARATION FILED BY THE ASSESSEE WAS ACCEPTED WITHOUT ANY FURTHER ADDITION OR OBJECTION FILED BY THE CENTRAL EXCISE A UTHORITIES. THE SETTLEMENT COMMISSION LEVIED THE PENALTY OF RS.8,00 0/-. 16. THE ASSESSING OFFICER ALSO HAS IN DETAIL DISCUS SED THE PROCESS INVOLVED IN THE MANUFACTURING OF INGOTS AS WELL AS BILLETS IN THE ASSESSMENT ORDER. AT THIS STAGE WE ARE NOT CONCERNE D WITH THE SAID DISCUSSION WHICH IS IN PARA NO. 4.1 OF THE ASSESSME NT ORDER. THE ASSESSING OFFICER IN HIS DISCUSSION FOR ARRIVING AT THE CONCLUSION THAT AS COMPARED TO THE CONSUMPTION OF THE ELECTRICITY SHOW N BY THE ASSESSEE THE PRODUCTION WAS MUCH MORE LOWER, HAS GIVEN THE EXAMPLES OR REFERENCE OF SOME OTHER MANUFACTURERS AGAINST WHOM ACTION TAKEN BY THE CENTRAL EXCISE AUTHORITIES. AS OBSERVED BY THE ASSESSING OFFICER AS PER AN ARTICLE WRITTEN BY SHRI R.P. VARSHNEY, EX ECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACES ASSOCIATION, NEW DELHI ON ELECTRIC STEEL MAKING TECHNOLOGY IN THE 21 ST CENTURY WHICH IS AVAILABLE ON THE 17 INTERNET WHICH IS ON THE ELECTRIC INDUCTION FURNACE AND AS PER THE SAID ARTICLE THE POWER CONSUMPTION IN INDUCTION FURNACE IS BETWEEN 650 TO 820 UNITS PER MT DEPENDING UPON THE INPUT CHARGE US ED. THE ASSESSING OFFICER ALSO REFERRED TO THE TECHNICAL RE PORT OF THE IIT, WHICH STATES THAT ELECTRICITY REQUIREMENT FOR MANUFACTURI NG 1 MT OF M.S. INGOTS WHERE MELTING SCRAP IS USED AS AN INPUT, VAR IES FROM 555 TO 754 UNITS AND WHERE SPONGE IRON IS USED AS AN INPUT, THE ELECTRICITY REQUIREMENT VARIES FROM 815 TO 1046 UNITS. THE ASS ESSING OFFICER, THEREFORE, CAME TO THE CONCLUSION THAT THE ASSESSME NT FRAMED BY THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD IN RESPECT OF THE ALLEGED SUPPRESSION OF PRODUCTION AFTER CONS IDERING THE ELECTRICITY CONSUMPTION DECLARED BY THE ASSESSEE AN D THE PRODUCTION RATE OF UNITS OF ELECTRICITY PER METRIC TON ADOPTED BY THE CCE, AURANGABAD ARE VERY MUCH REASONABLE, FAIR AND JUSTI FIED AND HE ADOPTED THE SAME FOR THE PURPOSE OF CALCULATION OF ALLEGED UNACCOUNTED PRODUCTION OF FINISHED GOODS (PARA NO. 4.3 OF THE ASSESSMENT ORDER). 17. THE ASSESSING OFFICER ALSO REJECTED THE BOOKS O F ACCOUNT OF THE ASSESSEE U/S. 145(3) OF THE INCOME-TAX ACT BY GIVIN G THE REASON THAT THE ASSESSEE HAS NOT GIVEN THE TRUE AND CORRECT PIC TURE. THE ASSESSING OFFICER ADOPTED THE SUPPRESSION OF PRODUC TION DETERMINED BY THE CCE, AURANGABAD AS PER HIS ADJUDICATION ORDE R AND HELD THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND ACCO RDINGLY, WORKED THE SUPPRESSED PRODUCTION OF THE A.Y. 2007-08 AS UN DER: A.Y. SUPPRESSED PRODUCTION M.T. RATE PER M.T. RS. ASSESSABLE VALUE OF SUPPRESSED PRODUCTION RS. 2007-08 20,751 18,892 39,20,37,546 2008-09 29,276 21,444 40,75,72,486 18. IN THE A.Y. 2007-08, THE ASSESSING OFFICER GAVE THE SET OFF OF RS.8,44,01,504/- WHICH WAS IN RESPECT OF THE ADDITI ON MADE BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT U /S. 143(3) OF THE ACT IN THE ORDER DATED 31-12-2008 AND MADE THE NET ADDITION OF RS.30,76,35,042/-. SO FAR AS A.Y. 2008-09 IS CONCE RNED NO ADJUSTMENT WAS MADE IN THE A.Y. 2008-09 AS IT WAS THE REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. EVEN THOUGH IN THE A.Y. 2008-09 , THE ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITY IS NOT RELEVANT, BUT FINALLY THE A SSESSMENT ORDER IS FRAMED ON THE BASIS OF THE ORDER PASSED BY THE COMM ISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD AS PER THE VA LUE DETERMINED IN THE ADJUDICATION ORDER FOR THE PURPOSE OF LEVY O F EXCISE DUTY ADOPTING STATISTIC OF POWER CONSUMPTION. IN THE COMPUTATION FOR THE A.Y. 2008- 09 THE ASSESSING OFFICER MADE THE MISTAKES BY MENTI ONING RS. (-) 1,91,62,000/- AS PER THE ORDER U/S. 143(3) WHEN IN FACT THE SAID FIGURE IS AS PER THE RETURN OF INCOME FILED BY THE ASSESSEE F OR THE A.Y. 2008-09. 30. AFTER ANALYZING THE SUBMISSIONS OF THE ASSESSEE , THE TRIBUNAL NOTED THAT IN BOTH THE YEARS BEFORE IT, THE ASSESSING OFF ICER HAD DETERMINED THE ALLEGED SUPPRESSION OF PRODUCTION / SALES AS DETERM INED BY THE CCE, AURANGABAD ON THE BASIS OF ERRATIC CONSUMPTION OF E LECTRICITY. THE BASIS OF THE ORDER OF CCE, AURANGABAD WAS THE REPORT OF DR. N.K. BATRA, PROFESSOR OF IIT, KANPUR. THE THIRD MEMBER OF CESTAT IN GROUP O F CASES OF FURNACE OWNERS HELD THAT THE ORDER OF CCE, AURANGABAD WAS N OT SUSTAINABLE AND HAD TO BE CANCELLED IN TURN, RELYING ON THE RATIO LAID DOWN IN R.A. CASTING (SUPRA). THE RELEVANT FINDING OF THE TRIBUNAL IN TURN, INCOR PORATING THE ORDER OF THIRD MEMBER OF CESTAT IN PARAS 19 TO 19.4, WHICH READ AS UNDER:- 19. IN SUM AND SUBSTANCE IN BOTH THE ASSESSMENT YE ARS THE ASSESSING OFFICER HAS DETERMINED ALLEGED SUPPRESSIO N OF THE PRODUCTION/SALES AS DETERMINED THE COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGABAD ON THE BASIS OF POWER CONSUM PTION. THE COPY OF THE ADJUDICATION ORDER PASSED BY THE COMMIS SIONER OF CENTRAL 18 EXCISE AND CUSTOM AND SERVICE TAX, AURANGABAD DATED 28-08-2009 (IN SHORT REFERRED TO AS THE CCE) IN THE CASE OF THE ASSESSEE IS PLACED AT PAGE NOS. 122 TO 174 OF THE P/B-I. THE C CE, AURANGABAD HAS OBSERVED THAT DURING THE SCRUTINY OF ELECTRICIT Y BILLS, IT WAS NOTICED THAT THE SUBSTANTIAL AMOUNT OF EXPENDITURE HAS INCU RRED BY THE ASSESSEE TOWARDS THE COST OF POWER CONSUMPTION (PRI MARY INPUT). HE HAS FURTHER OBSERVED THAT FROM THE SCRUTINY OF THE VARIOUS RECORDS, THE COST OF PRODUCTION IS MUCH MORE THAN COST OF SALE V ALUE, LEAVING NO ROOM FOR OTHER MAJOR EXPENSES LIKE STORES, WAGES, S ALARIES, COST OF MAINTENANCE ETC. THE LD. COMMISSIONER HAS REFERRED TO THE STUDY CONDUCTED BY THE INDIAN INSTITUTE OF TECHNOLOGY (II T), KANPUR AND HAS OBSERVED THAT AS PER THE SAID TECHNICAL OPINION RE PORT THE CONSUMPTION OF ELECTRICITY FOR MANUFACTURE OF ONE M ETRIC TON OF STEEL INGOTS VARIES BETWEEN 555 TO 1026 ELECTRICITY UNITS DEPENDING UPON THE THERMAL EFFICIENCY, ELECTRICITY EFFICIENCY AND NATU RE OF MIX OF RAW MATERIAL. AS OBSERVED BY THE LD. CCE IN THE CASE O F THE ASSESSEE AS PER THEIR ELECTRICITY BILLS, THE AVERAGE CONSUMPTIO N OF ELECTRICITY FOR MANUFACTURE OF 1 MT OF MS INGOTS VARIES FROM 1454 T O 1856 UNITS. 19.1 HE RELYING ON THE TECHNICAL REPORT OF IIT, KAN PUR THE LD. COMMISSIONER OBSERVED THAT ON CALCULATING THE PRODU CTION OF M.S. INGOT/BILLETS ON THE BASIS OF CONSUMPTION OF 1026 U NITS (MAXIMUM LIMIT) OF ELECTRICITY FOR PER MT OF MS INGOTS PRODU CED, IT IS NOTICED THAT THERE IS A HUGE DIFFERENCE IN THE ACTUAL/NORMAL PRO DUCTION AND THE RECORDED FIGURES IN THE ASSESSEES RECORDS. THE LD . CCE ACCORDINGLY, OBSERVED THAT THE ASSESSEE HAS WILLFULLY SUPPRESSED THE FIGURES OF PRODUCTION OF BILLETS/MS INGOTS IN THEIR RECORDS WI TH AN INTENT TO EVADE PAYMENT OF CENTRAL EXCISE DUTY AND, HAVE INVOLVED T HEMSELVES IN THE CLANDESTINE REMOVAL OF FINAL PRODUCTS. HE ALSO REF ERRED TO THE SHOW CAUSE NOTICE ISSUED BY THE DGCEI TO THE ASSESSEE WH ICH MATTER WAS ULTIMATELY SETTLED BY THE ASSESSEE COMPANY IN THE S ETTLEMENT COMMISSION. THE LD. COMMISSIONER ALSO REFERRED TO NON-MAINTENANCE OF THE PROPER ELECTRICITY CONSUMPTION RECORD MORE P ARTICULARLY IN FORM G-7. THE LD. COMMISSIONER ALSO GAVE THE DATA OF PR ODUCTION FROM APRIL, 2003 TO MARCH, 2008 IN HIS ORDER. HE HAS AL SO RECORDED THE OBJECTIONS OF THE ASSESSEE COMPANY. IT APPEARS THAT THE ASSESSE DEMANDED THE CROSS EXAMINATION OF DR. N.K. BATRA, P ROFESSOR OF IIT, KANPUR WHICH OPINION WAS HEAVILY RELIED ON BY THE C CE, AURANGABAD. THE LD. COMMISSIONER OBSERVED THAT THE SAID DR. N.K . BATRA WAS NO MORE AND HENCE, HIS CROSS EXAMINATION WAS NOT POSSI BLE. HE HAS ALSO DISCUSSED AND REFERRED TO THE DIFFERENT DECISIONS O F THE TRIBUNAL. THE LD. COMMISSIONER ALSO RELIED ON THE INVESTIGATION M ADE BY THE DGCEI AND SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE AND HO W THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION AND ADMITTED T HE EVASION AND PAID THE EXCISE DUTY AND OBTAINED IMMUNITY FROM CRI MINAL PROCEEDINGS. THE LD. COMMISSIONER CONFIRMED THE DEMAND RAISED IN THE SHOW CAUSE NOTICE AND ALSO LEVIED THE PENALTY TO THE EXT ENT OF RS.33,07,22,069/-. 19.2 THE SAID ORDER OF THE LD. COMMISSIONER WAS CHA LLENGED BEFORE THE CESTAT BY FILING THE APPEAL U/S. 35B(A) OF THE CENTRAL EXCISE ACT, 1944. THERE WAS A DIFFERENCE OF THE OPINION BETWEE N THE LD. MEMBERS OF THE CESTAT, I.E. LD. VICE-PRESIDENT AND LD. TECH NICAL MEMBER AND THE MATTER WAS REFERRED TO THE LD. THIRD MEMBER TO RESOLVE THE FOLLOWING DIFFERENCES: A. WHETHER IN VIEW OF THE DISCUSSION IN PARA 1 TO 3 1 AND IN VIEW OF THE DECISION OF THE TRIBUNAL IN THE CASE OF R.A. CASTIN GS PVT. LTD. (SUPRA) THE IMPUGNED ORDERS ARE TO BE SET ASIDE AND THE APPEAL ALLOWED. B. WHETHER IN VIEW OF THE DISCUSSION IN PARA 32 TO 68 ABOVE AND IN VIEW OF THE HON'BLE SUPREME COURTS JUDGMENT IN THE CASE OF TRIVENI RUBBER & PLASTICS (SUPRA) AND THIS TRIBUNAL S DECISION IN THE CASE OF RATTAN STEELS WORKS (SUPRA), NAGPAL STEEL ( SUPRA) AND 19 HANS CASTINGS PVT. LTD. (SUPRA), THE IMPUGNED ORDER ARE TO BE UPHELD AND ALL THE APPEALS DISMISSED. 19.3 THE LD. THIRD MEMBER OF THE CESTAT CONCURRED W ITH THE FINDING OF THE HON'BLE VICE-PRESIDENT THAT THE ORDE R PASSED BY LD. COMMISSIONER OF CENTRAL EXCISE AND CUSTOM, AURANGAB AD WAS NOT SUSTAINABLE AND HAS TO BE CANCELLED. THE OPERATIVE PART OF THE ORDER OF THE THIRD MEMBER IS AS UNDER: 20. IT IS ALSO SEEN THAT THE HON'BLE VICE PRESIDEN T CORRECTLY OPINED THAT THE JUDGMENT IN R.A. CASTING (SUPRA) IS SQUARELY APPLICABLE IN THE FACTS OF THE INSTANT APPEALS. IN R.A, CASTING THE ELECTRICITY CONSUMPTION WAS 2072 TO 2443 UNITS PER MT, WHICH IS HIGHER THAN THE AVERAGE ELECTRICITY CONSUM PTION IN THE INSTANT APPEALS. 20.1 THE COMMISSIONER IN THE ORDERS IMPUGNED IN THE INSTANT APPEALS WAS HAVING THE FOLLOWING REPORTS AND CLARIF ICATIONS FOR HIS CONSIDERATION- (I). 555 TO 1046 UNITS PMT AS PER DR. BATRA'S REPORT; (II). 1800 UNITS PMT AS PER THE REPORT BY JOINT PLA NT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOV ERNMENT OF INDIA; (III). 1427 UNITS PER MT AS PER THE REPORT OF NISST, MANDI, GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 TO 820 UNITS/MT AS PER ARTICLE OF THE EXECUTIVE DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); (V). 1000 TO 1800 UNITS PER TON OR EVEN HIGHER, AS PER LETTERS DATED 18.3.2008 AND 25.4.2008 OF SAME MR. R.P. VARSHNEY [ALL INDIA INDUCTION FURNACES ASSOCIATION] INFORMING THAT HIS ARTICLE PREPARED IN 1989-90 WAS FOR CONCAS T STEEL MAKING [THUS NOT FOR INDUCTION FURNACE], (VI). 620 TO 690 UNITS/MT AS PER LETTER DATED 22,6.2008 FROM ELECTROTHERM, (VII). LETTER DATED 9.8.2008 OF ELECTROTHERM TO A C LIENT SUGGESTING REASONS WHICH LEAD TO HIGH POWER- CONSUM PTION, AND ANOTHER LETTER DATED 5.4.2008 OF ELECTROTHERM A GREEING-., WITH .THE VIEWS OF INDUCTION FURNACE 'ASSOCIATION A ND INFORMING THAT IT IS VERY DIFFICULT TO DEFINE ANY RANGE OF PO WER CONSUMPTION. 20.2 AS AGAINST THIS, IN PARA 20 OF THE ORDER, THE TRIBUNAL IN R.A. CASTING (SUPRA) CONSIDERED DIFFERENT ELECTRICI TY CONSUMPTION FIGURES FOR PRODUCTION OF 1 MT OF MS IN GOTS, REPORTED IN FOLLOWING DIFFERENT REPORTS- (I). 555 TO 1046 (KWH/T) AS PER DR. BATRA'S REPORT; (II). 1800 KWH/T AS PER THE REPORT BY JOINT PLANT COMMITTEE CONSTITUTED BY THE MINISTRY OF STEEL, GOVERNMENT OF INDIA; (III). 1427 KWH/T AS PER THE REPORT OF NISST, MANDI , GOBINDGARH GIVEN IN JUNE-JULY, 2006; (IV). 650 UNITS TO 820 UNITS/MT AS PER THE EXECUTIV E DIRECTOR, ALL INDIA INDUCTION FURNACE ASSOCIATION, NEW DELHI (MR. VARSHNEY); 20 (V). 851 UNITS/MT IN THE CASE OF NAGPAL STEEL V. CC E, CHANDIGARH REPORTED IN 2000 (125) E.LT. 1147, 20.3 AFTER PERUSAL OF THESE REPORTS, TRIBUNAL OPINE D THAT WIDE VARIATIONS IN THE CONSUMPTION ELECTRICITY HAVE BEEN REPORTED FOR THE MANUFACTURE OF ONE MT OF STEEL INGOT&, AND THAT THIS RENDERS THE NORM OF 1046 UNITS ADOPTED BY THE REVENUE AS AR BITRARY. AFTER THIS FINDING, WHICH IS UPHELD BY THE HON'BLE ALLAHABAD HIGH COURT AND EVEN SLP HAS BEEN DISMISSED, THERE WAS NO REASON FOR THE COMMISSIONER IN THE INSTANT CASES TO CONSID ER THE NORM OF 1026 UNITS ALLEGEDLY AS PER REPORT OF DR. BATRA, FOR ARRIVING AT DEEMED PRODUCTION. MOREOVER, THE TRIAL RUN CONDUCTE D BY THE DEPARTMENT HAD PROVED THAT AT THAT TIME POWER CONSU MPTION WAS ACTUALLY HIGHER THAN THAT REPORTED IN DR. BATRA 'S REPORT. 20.4 IT IS ALSO SEEN THAT THE ALLEGATIONS LEVELLED IN R,A, CASTING (SUPRA) WERE MAINLY- (I). INORDINATELY HIGH ELECTRICITY CONSUMPTION WITH OUT ANY EXPLANATION, (II). SALE OF INGOTS AT A HUGE LOSS OVER LAST 4-5 Y EARS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBL E, (III). GENERATION OF FICTITIOUS PROFITS IN THE BALA NCE SHEETS BY DEPOSITING HUGE AMOUNT OF CASH WITH THE S TOCK BROKERS AND RECEIVING CHEQUES OF PROFITS AGAINST TH E CASH SO DEPOSITED, (IV). CLAIM OF HIGH AUXILIARY LOAD OF ABOUT 35%, HOWEVER THE TRIBUNAL IN CATEGORICAL TERMS HELD THAT NO DEMAND CAN BE UPHELD BASED ON ELECTRICITY CONSUMPTION AS S UCH BECAUSE THE CLANDESTINE MANUFACTURE AND REMOVAL OF EXCISABLE GOODS IS TO BE PROVED BY TANGIBLE, DIRECT, AFFIRMAT IVE AND INCONTROVERTIBLE EVIDENCES RELATING TO- (I). RECEIPT OF RAW MATERIAL INSIDE THE FACTORY PREMISES, AND NON-ACCOUNTING THEREOF IN THE STATUTO RY RECORDS; (II). UTILIZATION OF SUCH RAW MATERIAL FOR CLANDEST INE MANUFACTURE OF FINISHED GOODS; (III). MANUFACTURE OF FINISHED GOODS WITH REFERENCE TO INSTALLED CAPACITY, CONSUMPTION OF ELECTRICITY, LA BOUR EMPLOYED AND PAYMENT MADE TO THEM, PACKING MATERIAL USED, RECORDS OF SECURITY OFFICERS, DISCREPANCY IN THE STOCK OF RAW MATERIALS AND FINAL PRODUCTS; (IV). CLANDESTINE REMOVAL OF GOODS WITH REFERENCE T O ENTRY OF VEHICLE/TRUCK IN THE FACTORY PREMISES, LOA DING OF GOODS THEREIN, SECURITY GATE RECORDS, TRANSPORTERS' DOCUMENTS, SUCH AS L.RS, STATEMENTS OF LORRY DRIVER S, ENTRIES AT DIFFERENT CHECK POSTS, FORMS OF THE COMM ERCIAL TAX DEPARTMENT AND THE RECEIPT BY THE CONSIGNEES; (V). AMOUNT RECEIVED FROM THE CONSIGNEES, STATEMENT OF THE CONSIGNEES, RECEIPTS OF SALE PROCEEDS BY THE CONSIGNOR AND ITS DISPOSAL, 20.5 HOWEVER, SINCE NO SUCH EVIDENCES WERE BROUGHT ON RECORD, THE APPEAL OF R.A. CASTING WAS ALLOWED FOR WANT OF EVIDENCE RELATING TO THE ABOVE POINTS, WITH FURTHER FINDING THAT THE REVENUE, NOT HAVING CONDUCTED ANY EXPERIMENT 21 WHATSOEVER, CANNOT BE PERMITTED TO JUSTIFY THE DEMA NDS RAISED. SIMILAR IS THE FACT SITUATION IN THE INSTANT APPEAL S, 20.5 THE EVIDENCE AS PER REVENUE IN THE INSTANT APP EALS ARE- A). HIGH ELECTRICITY CONSUMPTION WITHOUT ANY EXPLANATION, B). SALE OF INGOTS AT LOSS, WHICH WAS ECONOMICALLY AND COMMERCIALLY NOT POSSIBLE, C). DISCREPANCIES IN FINANCIAL ACCOUNTS IN SOME CASES AND/OR ANY PROCEEDINGS UNDER INCOME TAX, D). CLAIM OF HIGHER AUXILIARY LOAD, E). PAST CASE SETTLED BEFORE SETTLEMENT COMMISSION, 20.7 SO FAR AS THE PROCEEDINGS ALREADY SETTLED ARE CONCERNED, THE COMMISSIONER IS HOT RELYING ON THE S AME AND THE FINDINGS OF THE COMMISSIONER, AS RECORDED EARLI ER, HAVE NOT BEEN CHALLENGED BY THE REVENUE. ALL THESE OTHER ALL EGATIONS WERE ALSO LEVELLED IN R.A. CASTING (SUPRA). IT WAS FURTHER OBSERVED IN R.A, CASTING (SUPRA) THAT IT WOULD BE A PPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT EXPERIMENTS IN T HE FACTORY OF THE APPELLANTS AND OTHERS AND THAT TOO ON DIFFERENT DATES TO ADOPT-THE TEST RESULTS AS THE BASIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. IT WAS FURTHER HELD THAT- '23. THE TRIBUNAL HAS CONSISTENTLY TAKEN THE VIEW THAT WHEREVER ELECTRICITY CONSUMPTION ALONE IS ADOPTED A S THE BASIS TO RAISE DEMANDS, THE ORDER OF THE LOWER AUTHORITIE S HAVE BEEN HELD TO BE UNSUSTAINABLE IN LAW AND SET ASIDE* AND THE REVENUE HAD BEEN DIRECTED TO CARRY OUT EXPERIMENTS IN DIFFE RENT FACTORIES ON DIFFERENT DATES TO ARRIVE AT THE AVERAGE TO BE A DOPTED AS A NORM, WHICH CAN BE FOLLOWED THEREAFTER AND THE REVE NUE IN THE PRESENT CASE NOT HAVING CONDUCTED ANY EXPERIMENT WH ATSOEVER CANNOT BE PERMITTED TO JUSTIFY THE DEMANDS RAISED. IT WILL BE APPROPRIATE ON THE PART OF THE REVENUE TO CONDUCT E XPERIMENTS IN THE FACTORY OF THE APPELLANTS AND OTHERS AND THA T TOO ON DIFFERENT DATES TO ADOPT THE TEST RESULTS AS THE BA SIS TO ARRIVE AT A NORM, WHICH CAN BE ADOPTED FOR FUTURE. THE IMPUGN ED DEMAND BASED MERELY ON ASSUMPTIONS AND PRESUMPTIONS CANNOT, THEREFORE, BE SUSTAINED NOR COULD BE JUSTIF IED BOTH ON FACTS AND IN LAW. 24. THE LAW IS WELL SETTLED THAT IN EVERY CASE OF ALLEGED CLANDESTINE REMOVAL, THE ONUS IS ON THE REVENUE TO PROVE WHAT IT ALLEGES WITH POSITIVE AND CONCRETE EVIDENCE. IN THE ABSENCE OF ANY POSITIVE EVIDENCE BROUGHT BY THE REVENUE TO DIS CHARGE ITS ONUS, THE IMPUGNED ORDER CANNOT BE SUSTAINED.' 20.8 IN THE PRESENT APPEALS, NONE OF THE SO CALLED OTHER EVIDENCES REFERRED IN THE IMPUGNED ORDERS PROVE CLA NDESTINE CLEARANCE. THE PRIMARY EVIDENCE OF DEPARTMENT IS AD MITTEDLY EXCESS ELECTRICITY CONSUMPTION BASED ON BENCHMARK A DOPTED ALLEGEDLY-'FROM REPORT OF DR. BATRA, WHICH WAS ALRE ADY HELD TO BE ARBITRARY BY HON'BLE TRIBUNAL IN RA CASTING (SUPRA) . THUS, IN MY OPINION THE PRIMARY EVIDENCE RELIED IN THE IMPUGNED ORDER IS ITSELF INADMISSIBLE, AND NO OTHER EVIDENCE IN THE I NSTANT CASE 22 PROVES CLANDESTINE PRODUCTION AND CLEARANCE TO SUST AIN, THE DEMAND, IT IS CONTENDED BY REVENUETHAT FURNACES INS TALLED IN THE FACTORY OF PRESENT APPELLANTS WERE IN SOUND CON DITION AS COMPARED TO R.A. CASTING (SUPRA), HOWEVER I NEITHER COULD FIND ANY MATERIAL IN SUPPORT OF THIS ARGUMENT, NOR ANY S UCH FINDING IN THE ORDERS IMPUGNED IN THE APPEALS. THE REVENUE SO UGHT TO RELY ON AN ORDER PASSED BY TRIBUNAL IN GUIABCHAND S ILK MILLS PVT. LTD., V/S. CCE, HYDERABAD-II, 2005 (184) ELT 2 63, HOWEVER THE SAME WAS ALSO CONSIDERED IN R.A. CASTIN G (SUPRA). IT HAS BEEN CONTENTION OF THE DEPARTMENT THAT THE D EPARTMENT IS NOT REQUIRED TO PROVE ITS CASE TO ITS MATHEMATICAL PRECISION, BY RELYING ON JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF D. BHOORMULL - 1983 (13) ELT 1546 (SC), RELIED U PON BY THE COMMISSIONER AS WELL AS THE HON'BLE MEMBER (TECHNIC AL). IT IS SEEN THAT EVEN THIS JUDGMENT WAS CONSIDERED IN R.A. CASTING (SUPRA), 21. THERE CAN BE NO DISPUTE ON THE FACT THAT IN ADJ UDICATION PROCEEDINGS, THE CHARGE OF CLANDESTINE REMOVAL IS D EFINITELY TO BE ESTABLISHED ON THE BASIS OF PREPONDERANCE OF PRO BABILITIES. HOWEVER, IT CANNOT BE MERELY ON THE BASIS OF PRESUM PTIONS AND ASSUMPTIONS, REGARDING THE CLAIM OF THE REVENUE THA T SUBSEQUENT TO PASSING OF IMPUGNED ORDERS THE POWER CONSUMPTION FOR MANUFACTURING ONE MT OF INGOTS HAS REDUCED IN FACTORIES OF ALL THE APPELLANTS, I AM OF THE VIEW T HAT IT CANNOT BE- .A' BASIS TO SUSTAIN THE FINDINGS IN THE IMPUGNED O RDERS BY ASSUMING THAT THERE COULD NOT BE ANY REASON FOR LOW ER CONSUMPTION OF ELECTRICITY DURING THE SUBSEQUENT PE RIOD. I ALSO AGREE WITH THE FINDING OF THE HON'BLE VICE PRESIDEN T THAT IN. ANY EVENT, THIS ADDITIONAL MATERIAL IS ALSO ONLY OF POW ER CONSUMPTION. 22. IN WRITTEN SUBMISSIONS OF REVENUE, IT HAS ALSO BEEN CONTENDED THAT REPORT OF JPC SUGGESTING ELECTRICITY CONSUMPTION UPTO 1800 ITS PMT WAS FOR ELECTRIC ARC FURNACE AND NOT INDUCTION- FURNACE. HOWEVER, THE APPELLANT HAS CONTENDED THAT PRODUCTIVITY IN. ELECTRIC ARC FURNACE IS HIGHE R THAN INDUCTION FURNACE. IN ANY EVENT, IN THE IMPUGNED ORDERS, THER E IS NO SUCH REASON TO DISCARD THE REPORT AND IN ANY EVENT THE L ETTER OF MR. R.P. VARSHNEY SUGGESTING THAT ELECTRIC CONSUMPTION IN INDUCTION FURNACE CAN BE UPTO 1800 UNITS PER MT IS ALSO ON RE CORD. SINCE, VARYING REPORTS ARE ON RECORD, THE RATIO OF R.A. CA STING (SURA) IS SQUARELY APPLICABLE. 23. REVENUE, ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE SUPREME COURT IN THE CASE OF MELTON INDIA V/S. THE COMMISSIONER TRADE TAX, U.P, - 2007-TIOL-14-SC-CT, THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE C ASE OF RAJMOTI INDUSTRIES V/S. JOINT COMMISSIONER OF INCOM E TAX, 2014-TIOL-203-HC-AHM-IT, AND AN UNREPORTED ORDER DT D. 28/9/2010 OF ANDHRA PRADESH SALES TAX TRIBUNAL (VISAKHAPATNAM BENCH) IN THE CASE OF VENKATA RAIMAN A STONE CRUSHERS COMPANY V/S. STATE OF ANDHRA PRADESH. IN T HE CASE OF MELTON INDIA (SUPRA), FOR THE NORM, OF POWER CON SUMPTION, ACTUAL ELECTRICITY CONSUMPTION OF THE ASSESSMENT YE AR 2000-01 WAS TAKEN AS 'NORM' AND THE SAME WAS APPLIED IN SUB SEQUENT ASSESSMENT YEARS 2001-02 AND 2002-03.THIS WAS FOLLO WED BY THE SALES TAX TRIBUNAL IN THE ORDER CITED BY REVENU E. IN THE CASE OF RAJMOTI INDUSTRIES, FACTS OF THE CASE ARE T HAT FOR THE ASSESSMENT YEAR 2005-06, THE ASSESSING OFFICER REJE CTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND MADE VARIOUS ADDITIONS, NOT ONLY FOR THE REASON OF UNEXPLAINED WIDE FLUCTUA TIONS IN THE PRODUCTIVITY AS COMPARED TO THAT IN A.Y. 2004-05, B UT ALSO 23 BECAUSE THE ASSESSEE THEREIN HAD NOT RECORDED THE W ORK-IN- PROGRESS IN THE BOOKS OF ACCOUNTS. I AM THEREFORE O F THE OPINION THAT THESE CASES, APART FROM BEING UNDER STATUTES O THER THAN CENTRAL EXCISE ACT, DO NOT ANY MANNER HELP IN SUSTA INING THE FINDINGS RECORDED IN THE IMPUGNED ORDER. IN NONE OF THESE CASES ANY THEORETICAL REPOT WAS RELIED FOR ARRIVING AT DEEMED PRODUCTION. 24. FURTHER, IN SARVANA ALLOYS STEELS PVT LTD, 2011 - (274) ELT 248 (TRI-BANG.) SIMILAR ORDER BASED ON POWER CO NSUMPTION WAS HELD UNSUSTAINABLE AND THE APPEAL WAS ALLOWED A FTER CONSIDERING INTER ALIA THE JUDGMENTS IN D. BHOORMUL L (SUPAR), GULABCHAND SILK MILLS (SUPRA), AS ALSO HANS CASTING (SUPRA). IN A.K. ALLOYS, 2012 (275) E.L.T. 232 (TRI. - DEL.) TH E TRIBUNAL FOLLOWED THE DECISION OF R.A. CASTING (SUPRA) AND A LLOWED THE APPEAL, AS THE DEMAND WAS BASED MAINLY ON THE EVI DENCE OF POWER CONSUMPTION WITHOUT ANY EVIDENCE OF CLANDESTI NE REMOVAL. 25. I THEREFORE CONCUR WITH THE FINDINGS OF THE HON 'BLE VICE PRESIDENT AND IN MY OPINION, THE JUDGMENT IN R.A. C ASTING (SUPRA) WOULD BE SQUARELY APPLICABLE IN THE FACTS O F THE INSTANT CASE IN ALL THE APPEALS. 19.4 THE COMMON ORDER WAS PASSED BY THE CESTAT ON 3 0-07-2006 AS PER THE MAJORITY OPINION ALLOWING THE APPEALS FI LED BY THE ASSESSEE AND OTHER APPELLANT COMPANIES. THE COPY OF THE MAJ ORITY ORDER IS PLACED AT PAGE NOS. 5 AND 6 OF THE P/B VI. IT IS PERTINENT TO NOTE HERE THAT THE LD. COMMISSIONER HAS ALSO CONSIDERED THE INVESTIGATION MADE BY THE DGCEI AGAINST SOME BROKERS AND IN CONSE QUENCE THE SHOW CAUSE NOTICES (SCN) WERE ISSUED TO THE ASSESSE E AND OTHER COMPANIES AND THE ASSESSEE AND OTHER COMPANIES CAME FORWARD BEFORE THE SETTLEMENT COMMISSION AND PAID THE EXCIS E DUTY. HENCE, THE INVESTIGATION OF THE DGCEI MADE AGAINST THE BRO KERS AND SUB- BROKERS REFERRED BY THE ASSESSING OFFICER WAS ALSO BEFORE THE LD. COMMISSIONER, AURANGABAD. ON PERUSAL OF THE ASSESS MENT ORDERS IT IS CLEAR THAT BOTH THE ASSESSMENTS ARE MERELY BASED ON THE ALLEGED SUPPRESSION OF THE PRODUCTION BY ESTIMATING CERTAIN CONSUMPTION OF ELECTRICITY I.E. 1026 UNITS FOR MANUFACTURING OF 1 MT OF INGOTS AND BILLETS. MOREOVER, EVEN IF IN THE A.Y. 2008-09, TH E ASSESSING OFFICER HAS OBSERVED THAT THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE AUTHORITIES HAS NO BEARING IN THE SAID ORDER BUT ON THE PERUSAL OF THE SAID ORDER, IT IS SEEN THAT ENTIRE ORDER IS COPY OF ORDER PASSED FOR THE A.Y. 2007-08. AS VARY BASIS OF THE ASSESSMENT ORDE R I.E. THE ORDER OF THE COMMISSIONER OF CENTRAL EXCISE (CCE), AURANGABA D HAS BEEN SET ASIDE AND CANCELLED BY THE CESTAT, IN OUR OPINION T HE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER AND CONFIRME D BY THE LD. CIT(A) APPROVING THE ESTIMATED ALLEGED SUPPRESSION OF THE PRODUCTION/SALES HAVE NO LEGAL LEGS TO STAND. 31. THE TRIBUNAL THEREAFTER, DEALT WITH THE ARGUMEN TS OF LD. SPECIAL AR THAT EVEN THE MINORITY DECISION OF LD. TECHNICAL ME MBER OF CESTAT WAS A LEGAL ORDER. THIS PLEA OF THE LD. SPECIAL AR WAS R EJECTED BY THE TRIBUNAL IN VIEW OF THE DECISION OF THIRD MEMBER OF THE CESTAT. 32. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR WAS WITH REFERENCE TO THE ORDER OF SETTLEMENT COMMISSION PASSED IN THE CA SE OF SET OF COMPANIES. THE TRIBUNAL NOTED THAT THE CCE, AURANGABAD IN ITS ORDER HAD TAKEN INTO CONSIDERATION THE SAID MATERIAL WHILE DETERMINING T HE VALUE OF ALLEGED SUPPRESSED PRODUCTION AND HAD MADE OBSERVATIONS VID E PARA 19. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN M/S. SRJ P EETY STEELS PVT. LTD. (SUPRA) WERE AS UNDER:- 24 20.1 THE LD. TECHNICAL MEMBER OF THE CESTAT. T HE LD. SPL. AR FOR THE REVENUE ALSO REFERRED TO THE ORDER OF TH E SETTLEMENT COMMISSION, MUMBAI PASSED IN THE CASE OF THE ASSESS EE AND OTHER COMPANIES. IT IS TRUE THAT THE ASSESSEE APPROACHED THE SETTLEMENT COMMISSION WHEN ON THE BASIS OF INVESTIGATION MADE BY THE DGCEI AGAINST SOME OF THE BROKERS AND SUB-BROKERS DEALING IN THE INGOTS/BILLETS AND TMT BARS SHOW CAUSE NOTICE WAS I SSUED TO THE ASSESSEE COMPANY AND MATTER WAS SETTLED. LD. CCE, AURANGABAD IN HIS ORDER HAS TAKEN IN TO CONSIDERATION SAID MATTER WHILE DETERMINING THE VALUE OF THE ALLEGED SUPPRESSED PRODUCTION AND HAS OBSERVED AS UNDER: 19. THERE ARE OTHER INSTANCES OF CENTRAL EXCISE VI OLATIONS DETECTED BY OTHER AGENCIES WHERE THE ASSESSEE WAS F OUND TO BE INVOLVED. IN ONE INSTANCE THAT ASSESSEE HAD APPR OACHED THE SETTLEMENT COMMISSION, ADMITTED THE EVASION OFFENCE OF AN IDENTICAL NATURE AND HAD OBTAINED IMMUNITY FROM CRI MINAL PROCEEDINGS. THE ASSESSEE HAS HOWEVER ARGUED THAT EACH CASE HAS TO BE TREATED AS A SEPARATE CASE BASED ON ITS OWN MERIT AND DEALT WITH ACCORDINGLY. THE ARGUMENT OF THE ASSESSEE IS ACCEPTED. NO RELIANCE HAS BEEN PLACED ON EVIDENCE RELIED UPON IN CENTRAL EXCISE PROCEEDINGS. THE FINDINGS IN THIS CASE ARE BASED ONLY ON MATERIAL AN D EVIDENCE THAT HAVE BEEN BROUGHT ON RECORD IN THE INSTANT CAS E. 33. THE TRIBUNAL THEREAFTER, NOTED ANOTHER ASPECT O F THE ISSUE THAT NO INDEPENDENT INVESTIGATION WAS MADE BY THE REVENUE, BUT THE ENTIRE ASSESSMENT WAS FRAMED ON THE BASIS OF INFORMATION R ECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD, WHICH IN TURN, HAD BEEN CANCELLED BY TH E THIRD MEMBER OF CESTAT. THE TRIBUNAL THUS, HELD THAT THE FOUNDATIO N FOR ASSESSMENT DOES NOT EXIST. IT WAS ALSO NOTED BY THE TRIBUNAL IN PA RA 21 THAT THE INVESTIGATION BY THE DGCEI AND PROCEEDINGS BEFORE THE SETTLEMENT COM MISSION WERE CONSIDERED BY THE CCE IN ITS ADJUDICATION ORDER, WH ICH IN TURN, WAS THE SUBJECT MATTER OF CESTAT AND THE SAID ORDER HAS BEEN SET-AS IDE, HENCE, IT WAS NOT NECESSARY TO DEAL WITH THE DECISIONS RELIED UPON BY THE LD. SPECIAL AR, WHICH ARE IN THE CONTEXT OF ADMISSION OF THE DIRECTOR IN THE COURSE OF INVESTIGATION MADE BY THE DGCEI. 34. THE SECOND ISSUE OF MAINTAINING OF FORM NO.G-7 IN RESPECT OF ELECTRICITY CONSUMPTION, WAS ALSO BEFORE THE CESTAT AND THE TRIBUNAL OVERRULED THE ARGUMENTS OF THE LD. SPECIAL AR AND U PHELD THE ARGUMENTS OF LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE ORDER OF CESTAT HAD TO BE APPLIED. THE RELEVANT PARA OF THE TRIBUN AL ORDER READS AS UNDER:- 21. THOUGH THE LD. SPL. AR HAS REFERRED TO AND R ELIED ON THE DIFFERENT JUDGMENTS OF THE HON'BLE SUPREME COURT MO RE PARTICULARLY ON THE BINDING NATURE OF THE ADMISSION OF ANY PERSON -SEC. 17, SEC. 106 AND SEC. 115 OF THE INDIAN EVIDENCE ACT ETC. BUT TH E FACT REMAINS THAT IN THE CASE OF THE PRESENT ASSESSEE NO INDEPENDENT INVESTIGATION IS MADE BY THE REVENUE BUT THE ENTIRE ASSESSMENTS ARE FRAMED ON THE BASIS OF THE INFORMATION RECEIVED FROM THE CENTRAL EXCISE DEPARTMENT AS WELL AS THE ADJUDICATION ORDER PASSED BY THE LD. COMMISSIONER OF CENTRAL EXCISE, AURANGABAD. MOREOVER, AS OBSERVED A BOVE THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD HA S BEEN CANCELLED BY THE CESTAT, MUMBAI BY MAJORITY OPINION AND HENCE, FOUNDATION OF ASSESSMENTS FOR A. YRS. 2007-08 & 200 8-09 DO NOT EXIST. THE LAW IS ALSO WELL SETTLED THAT WHEN THE ASSESSEE FILES AN APPEAL CHALLENGING AN ORDER OF THE LOWER AUTHORITY BEFORE THE HIGHER APPELLATE AUTHORITY THEN THE ENTIRE ORDER GETS MERGED WITH TH E ORDER OF THE HIGHER APPELLATE FORUM WHICH IN THE PRESENT CASE IS CESTAT . MOREOVER, INVESTIGATION BY DGCEI AND PROCEEDING BEFORE THE SE TTLEMENT COMMISSION HAS ALSO BEEN CONSIDERED BY THE CCE, AUR ANGABAD IN HIS ADJUDICATION ORDER. THE SAID ORDER WAS SUBJECT MATT ER BEFORE THE CESTAT AND SAID ORDER HAS BEEN SET ASIDE. HENCE, W E DO NOT CONSIDER IT NECESSARY TO DEAL WITH DECISIONS RELIED ON BY LD. SPL AR OF 25 THE REVENUE WHICH ARE IN CONTEXT OF ADMISSION OF TH E DIRECTOR OF THE ASSESSEE IN THE COURSE OF INVESTIGATION MADE BY DGC EI MORE PARTICULARLY UNDER THE INDIAN EVIDENCE ACT AS THOSE DECISIONS ARE NOT RELEVANT NOW THOUGH GOOD FOR ACADEMIC DISCUSSION. S O FAR AS MAINTAINING OF FORM G-7 IN RESPECT OF THE ELECTRICI TY CONSUMPTION, THE SAID ISSUE WAS ALSO BEFORE THE CESTAT WHILE DECIDIN G THE FATE OF ORDER OF THE LD. CCE, AURANGABAD. LD. AR VEHEMENTLY ARGUED TO POINT OUT HOW THE ORDER OF THE CESTAT, MUMBAI BENCH, MUMB AI IS NOT CORRECT. THE CESTAT IS A HIGHER APPELLATE FORUM UND ER THE CUSTOM ACT 1962 AND CENTRAL EXCISE ACT 1944 AND WE CANNOT SIT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDE R IS RIGHT OR WRONG. 35. THE TRIBUNAL HELD THAT CESTAT WAS AN APPELLATE FORUM UNDER THE CUSTOMS ACT, 1962 AND CENTRAL EXCISE ACT, 1954 AND THE TRIBUNAL (INCOME- TAX) COULD NOT ACT AS REVISIONARY AUTHORITY OR MAKE ANY OBSERVATION WHETHER THAT ORDER WAS RIGHT OR WRONG. 36. THE TRIBUNAL FURTHER REFERRED TO SEARCH AND SEI ZURE OPERATIONS CARRIED OUT UNDER SECTION 132(1) OF THE ACT ON 17.03.2006 A GAINST M/S. SRJ PEETY STEELS PVT. LTD. AND THE ASSESSMENT FRAMED UNDER SE CTION 153A R.W.S. 143(3) OF THE ACT. THE ASSESSEE THEREIN I.E. M/S. SRJ PEE TY STEELS PVT. LTD. HAD FILED AN APPEAL BEFORE THE TRIBUNAL AND THE ORDER OF THE TRIBUNAL IS REPORTED IN 137 TTJ (PUNE) 627. THE TRIBUNAL IN M/S. SRJ PEETY STE ELS PVT. LTD. (SUPRA) REFERRED TO THE OBSERVATIONS OF TRIBUNAL IN EARLIER PROCEEDINGS RELATING TO ASSESSMENT YEARS 2000-01 TO 2006-07 UNDER SECTION 1 53A R.W.S 143(3) OF THE ACT AND HELD THAT IN THE SAID CASE OF SEARCH AND SE IZURE, IT WAS ALSO HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURE OF MILD STEEL, INGOTS / BILLETS DEPENDING ON VARIOUS FACTORS AND THERE WAS NO JUSTI FICATION TO CHARGE THE ASSESSEE THAT IT HAD SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT AND THE REVENUES APPEAL WAS DISMISSED BY COMMON ORDER DATED 10.02.2014 IN T HE CASE OF ASSESSEE AND OTHER COMPANIES BY THE HONBLE BOMBAY HIGH COUR T AND THERE WERE OBSERVATIONS ON THE ESTIMATION OF PRODUCTION BASED ON THE CONSUMPTION OF ELECTRICITY. THE TRIBUNAL WHILE DECIDING THE APPEA L OF M/S. SRJ PEETY STEELS PVT. LTD. IN THIS REGARD OBSERVED AS UNDER:- 22. WE HAVE ALREADY MENTIONED HERE-IN-ABOVE THAT I N THE CASE OF THE ASSESSE, THE SEARCH AND SEIZURE OPERATION WAS CARRI ED OUT U/S. 132(1) OF THE INCOME-TAX ACT ON 17-03-2006 AND ACCORDINGLY THE AS SESSMENT ORDERS FOR THE A.YS. 2000-01 TO 2006-07 WERE FRAMED U/S. 153A R.W. S. 143(3) OF THE ACT. THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE A.YS. 2000-01 TO 2006-07 AND ONE OF THE REASONS WAS THAT ALLEGED SUPPRESSED PRODUCTION WHICH WAS COMPUTED ON THE BASIS OF CONSU MPTION OF THE ELECTRICITY. THE ASSESSING OFFICER DEVISED A FORMULA ON THE BASI S OF ELECTRICITY CONSUMPTION AND THE SAME WAS APPLIED UNIFORMLY IN O RDER TO WORK OUT CERTAIN ALLEGED SUPPRESSED PRODUCTION AND RESULTANT CONCEAL ED INCOME IN THE CASE OF THE ASSESSEE. THE ASSESSING OFFICER TOOK 1,600 UNI TS AS CONSUMPTION PER MT WHICH WAS A LOWEST AS SHOWN BY THE ASSESSEE. THE A SSESSING OFFICER, ACCORDINGLY, WORKED OUT THE ALLEGED SUPPRESSED PROD UCTION AND MADE THE ADDITION IN ALL THE YEARS WHILE COMPLETING THE ASSE SSMENTS. IN SUM AND SUBSTANCE THE ASSESSING OFFICER HAD SIMPLY TAKEN TH E LOWEST ELECTRICITY CONSUMPTION FOR A MONTH IN A WHOLE YEAR AND ACCORDI NGLY WORKED OUT THE TOTAL PRODUCTION AS PER HIS FORMULA AND ON THE BASIS OF T HE FORMULA HE WORKED OUT THE ALLEGED CONCEALED INCOME. THERE ARE CERTAIN IM PORTANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL WHICH ARE AS UNDER: 31. IN THE PRESENT CASE, THE SEARCH WAS INITIATED O N 17TH MARCH, 2006 IN THE RESIDENTIAL AND BUSINESS PREMISES OF SRJ PEE TY GROUP, JALNA COVERING THE PREMISES OF THE ASSESSEE COMPANY AS WE LL. PRIOR TO THE SEARCH, THE RETURNS OF INCOME FOR THE ASST. YRS. 20 00-01 TO 2005-06 HAD ALREADY BEEN FILED UNDER S. 139(1) OF THE ACT ACCOM PANIED BY ALL REQUISITE DOCUMENTS AND PROCEEDING UNDER S. 143(1) OF THE ACT STOOD COMPLETED. DURING THE COURSE OF SEARCH NO INCRIMINA TING MATERIALS WERE FOUND RELATING TO AFORESAID YEARS WHICH COULD HAVE BEEN ADDED BACK IN THE PROCEEDINGS UNDER S. 153A. THE DETAILS REGARDING THE 26 CONSUMPTION OF ELECTRICITY FOR THE PRODUCTION FOR E ACH OF THE YEAR UNDER CONSIDERATION WAS VERY WELL PLACED BEFORE THE AUTHO RITIES BELOW IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HAS NOT BE EN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINED THE UN IT PRODUCTION OF EACH YEAR WHICH WERE ACCEPTED YEAR AFTER YEAR ALONG WITH THE RETURNS AND NO QUERY WAS EVER RAISED BY THE DEPARTMENT. THE FOLLOWING CHART SHOWS THE YEAR-WISE PRODUCTION VIS-A-VIS ELECTRICIT Y CONSUMPTION WHICH HAS BEEN PLACED BEFORE THE AUTHORITIES BELOW ALONG WITH THE RETURNS FOR EACH YEAR: ASST. YR. ELECTRICITY CONSUMPTION PRODUCTION (MT) YEARLY AVERAGE CONSUMPTION (UNITS) 2000-01 24331059 18,524.239 1313 2001-02 25528565 17,010.558 1501 2002-03 31404354 19,709.654 1593 2003-04 31623843 20,396.313 1550 2004-05 43123824 23,240.189 1856 2005-06 62650888 29,582.434 2118 2006-07 70440580 36,017.983 1956 32. THE MATTER OF FLUCTUATING CONSUMPTION OF ELECTR ICITY CAN BY NO MEANS BE SAID TO BE A FINDING OF SEARCH SINCE ALL D ETAILS REGARDING ELECTRICITY VIS-A-VIS PRODUCTION WERE BEFORE THE DE PARTMENT. IF THE DEPARTMENT HAD ANY DOUBTS REGARDING THE SAME, IT CO ULD HAVE BEEN RAISED DURING THE REGULAR ASSESSMENTS AND NOT IN TH E ASSESSMENT PROCEEDINGS UNDER S. 153A OF THE ACT. WHEN NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SEARCH RELATING TO ANY OF TH ESE ASSESSMENT YEARS, THE ASSESSMENTS FOR SUCH YEARS COULD NOT BE DISTURBED ON THIS GROUND. 33. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION WE FIND THAT THE ADDITIONS IN QUESTION IN ASST. YRS. 2000-01 TO 2005 -06 ARE NOT CORRESPONDING TO THE SEIZED MATERIAL FOUND DURING T HE COURSE OF SEARCH. THE RELEVANT IT RETURNS FOR SAID YEARS WERE FILED PRIOR TO THE SEARCH IN NORMAL COURSE DISCLOSING THE PARTICULARS OF SUBJECT-MATTERS WERE ALREADY ON RECORD. THE RETURNS HAVE ALREADY BE EN ACCEPTED AND NO ASSESSMENT AS SUCH COULD BE SAID TO BE PENDING O N THE DATE OF INITIATION OF SEARCH AND ABATED IN LIGHT OF THE PRO VISIONS OF S. 153A. 34. WITHOUT PREJUDICE TO ABOVE, WITH REGARD TO INVO KING THE PROVISIONS OF S. 145 OF THE ACT, ACCORDING TO WHICH IN CASE TH E AO IS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF ACCOUNTS O F THE ASSESSEE OR WHERE NO METHOD OF ACCOUNTING PROVIDED IN SUB-S. (1 ) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-S. (2), HAVE NOT BE EN REGULARLY FOLLOWED BY THE ASSESSEE, THE AO MAY MAKE AN ASSESS MENT IN THE MANNER PROVIDED IN S. 144. SEC. 145 GIVES THE POWER TO AO TO REJECT THE BOOKS IN CERTAIN CIRCUMSTANCES AFTER CONSIDERIN G THE FOLLOWING ASPECTS: (A) WHETHER THE ASSESSEE HAS REGULARLY EMPLOYED A M ETHOD OF ACCOUNTING? (B) WHETHER THE ANNUAL PROFITS CAN BE PROPERLY DEDU CED FROM THE METHOD EMPLOYED? (C) WHETHER THE ACCOUNTS MAINTAINED ARE CORRECT AND COMPLETE? 27 35. WITHOUT PREJUDICE TO ABOVE, WE FIND THAT HAVING REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY FOR ALL THE YEA RS UNDER CONSIDERATION, THE AO DEVISED A STATISTICAL FORMULA ON THE BASIS OF ELECTRICITY CONSUMPTION THAT WAS APPLIED UNIFORMLY IN ORDER TO WORK OUT CERTAIN PRODUCTION AND RESULTANT CONCEALED INCOME F OR EACH YEAR UNDER CONSIDERATION. THE AO COULD NOT SUBSTITUTE THE SAME BY COGENT REASONING. HE HAS SIMPLY TAKEN THE LOWEST ELECTRICI TY CONSUMPTION FOR A MONTH IN THE WHOLE YEAR AND TREATED THE PRODUCTION IN THAT MONTH AS THE CORRECT PRODUCTION AND THEN PROCEEDED TO ARRIVE AT HIS PRODUCTION FIGURE BY MULTIPLYING THE PRODUCTION IN THE BOOKS B Y THE RATIO OF PRODUCTION TO THE ELECTRICITY CONSUMPTION FOR THE M ONTH IN WHICH ELECTRICITY CONSUMPTION WAS MINIMUM. THE METHOD OF COMPUTING THE SO-CALLED SUPPRESSED PRODUCTION IS NOT JUSTIFIED IN ABSENCE OF SOUND BASIS FOR SAME. 36. THE CONSUMPTION OF THE ELECTRICITY FOR THE MANU FACTURE OF MILD STEEL INGOTS/BILLETS DEPENDS ON VARIOUS FACTORS LIKE QUAL ITY OF RAW MATERIAL WHICH IS THE MAJOR INPUT, VOLTAGE OF THE SUPPLY, PO WER INTERRUPTIONS, MECHANICAL AND ELECTRICAL BREAKDOWNS AND THE CHEMIC AL COMPOSITION OF THE LIQUID METAL WHICH HAS TO BE FINALLY CAST INTO INGOTS/BILLETS. THE AO FAILED TO APPRECIATE THESE FACTS AND DID NOT ATTEMP T TO ESTABLISH A DIRECT NEXUS BETWEEN THE PRODUCTION AND ELECTRICITY CONSUM ED FOR THE MANUFACTURE OF ROUND/TMT BARS AND ARRIVED AT A CONC LUSION THAT THERE IS AN EXCESS CONSUMPTION OF ELECTRICITY RESULTING I N SUPPRESSED PRODUCTION AND ALLEGING THAT THE ASSESSEE COMPANY H AS INDULGED IN UNACCOUNTED PRODUCTION. 37. NONE OF THE EVIDENCE COLLECTED AS A RESULT OF S EARCH OR DETECTED DURING THE COURSE OF ASSESSMENT PERTAINS TO THE ASS T. YRS. 2000-01 TO 2005-06. IT IS AN ACCEPTED FACT THAT EACH YEAR OF T HE ASSESSMENT IS INDEPENDENT AND EVIDENCES FOUND RELATING TO ASST. Y R. 2006-07 CANNOT HAVE AN ADVERSE IMPACT ON THE ASSESSMENTS OF THE AS SESSEE COMPANY FROM THE ASST. YRS. 2000-01 TO 2005-06. THEREFORE, REJECTION OF BOOKS FOR THESE YEARS PURELY ON THE GROUND THAT THERE HAS BEEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY AND APPLICATION OF S . 144 IS NOT AT ALL JUSTIFIED. ACCORDINGLY ADDITIONS HAVE RIGHTLY BEEN DELETED IN ASST. YRS. 2000-01 TO 2005-06 IN BOTH THE CASES. 23. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL IN A SSESSEES OWN CASE IN THE SEARCH AND SEIZURE MATTER AS IT IS HELD THAT THE CONSUMPTION OF ELECTRICITY FOR THE MANUFACTURING OF MILD STEEL ING OTS/BILLETS DEPENDS ON VARIOUS FACTORS AND THERE WAS NO JUSTIFICATION TO C HARGE THE ASSESSEE THAT THE ASSESSEE HAS SUPPRESSED THE PRODUCTION AND INDULGED INTO UNACCOUNTED PRODUCTION. THE ORDER OF THE TRIBUNAL WAS CHALLENGED BY THE DEPARTMENT BEFORE THE HON'BLE HIGH COURT OF BOM BAY BENCH AT AURANGABAD BY FILING THE APPEAL U/S. 260A OF THE IN COME-TAX ACT, BEING TAX APPEAL NO. 30 OF 2011. THE REVENUES APPEAL WA S DISMISSED VIDE COMMON JUDGMENT DATED 10-02-2014, IN THE CASE OF THE ASSESSEE AND OTHER COMPANIES BY THE HON'BLE HIGH COURT AND T HERE ARE CATEGORICAL OBSERVATIONS OF THEIR LORDSHIPS ON THE ESTIMATION OF THE PRODUCTION BASED ON THE CONSUMPTION OF THE ELECTRIC ITY WHICH ARE AS UNDER: 4. IN THAT REGARD, THE TRIBUNAL AS ALSO THE COMMIS SIONER OF INCOME TAX (APPEALS) HAVE CONCURRENTLY FOUND THAT T HE SEARCH WAS INITIATED ON 17/03/2006 IN THE RESIDENTIAL AND BUSI NESS PREMISES OF SRJ PEETY STEELS PVT. LTD. PRIOR TO THE SEARCH, THE RE TURNS OF THE INCOME FOR THE ASSESSMENT YEAR 2000-01 TO 2005-06 HAD ALREADY BEEN FILED U/S. 139(1) OF THE ACT, ACCOMPANIES BY ALL REQUISITE DOC UMENTS AND PROCEEDINGS. THE SCRUTINY WAS THUS COMPLETED. DUR ING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND RELATIN G TO THE SAID YEARS, WHICH COULD HAVE BEEN ADDED IN THE PROCEEDINGS U/S. 153A. THE DETAILS REGARDING THE CONSUMPTION OF ELECTRICITY FO R THE PRODUCTION FOR EACH OF THE YEAR UNDER CONSIDERATION WAS PLACED BEF ORE THE AUTHORITIES IN THE DIRECTORS REPORT OF EACH YEAR. THE SAME HA S NOT BEEN DISPUTED BY THE REVENUE. THE TAX AUDIT REPORT ALSO CONTAINS THE UNIT 28 PRODUCTION OF EACH YEAR, WHICH WAS ACCEPTED YEAR AF TER YEAR ALONG WITH RETURNS AND NO QUERY WAS RAISED BY THE REVENUE. TH E FINDING OF FACT DATED 31/03/2008 IN THE ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL REFERS TO A DETAILED CHART. THE MATTER OF FLUCTUATING ELECTRICITY, THEREFORE, WAS HELD TO BE ONE, AND SINCE DETAILS WE RE MADE AVAILABLE TO THE DEPARTMENT, WHICH COULD HAVE BEEN RAISED DUR ING THE COURSE OF REGULAR ASSESSMENT AND NOT U/S. 153A OF THE ACT. T HE FINDING IS THAT NOTHING INCRIMINATING WAS FOUND IN THE COURSE OF SE ARCH RELATING TO THESE ASSESSMENT YEARS. THE ADDITIONS, THEREFORE, WERE NOT CORRESPONDING TO THE SEIZED MATERIAL DURING THE COU RSE OF SEARCH. THE RELEVANT INCOME TAX RETURNS, IN NORMAL COURSE, ARE DISCLOSING THE PARTICULARS. THEY WERE ALREADY ON RECORD. THE RETU RNS HAVE BEEN ACCEPTED. IN SUCH CIRCUMSTANCES, THE TRIBUNAL, AS ALSO, THE COMMISSIONER OF INCOME TAX (APPEALS) HAVE IN THEIR ORDERS, HELD THAT THERE ARE SEVERAL FACTORS WHICH HAVE TO BE TAKEN IN TO CONSIDERATION AND WHILE ARRIVING AT A CONCLUSION WITH REGARD TO THE A LLEGED PRODUCTION CALCULATED ON THE BASIS OF ELECTRICITY CONSUMPTION. REJECTION OF BOOKS FOR THESE YEARS ONLY ON THE GROUND THAT THERE HAS B EEN DIVERGENCE IN THE CONSUMPTION OF ELECTRICITY, THEREFORE, WAS HELD NOT JUSTIFIED. 24. LD. SPL. AR FOR THE REVENUE ARGUES THAT THE SAI D OBSERVATIONS ARE MADE IN THE CONTEXT OF THE ASSESSMENT FRAMED IN CONSEQUENCE OF SEARCH AND SEIZURE OPERATION. WE ARE NOT INCLINED TO ACCEPT THE ARGUMENT OF THE LD. SPL AR FOR THE REASON THAT EVEN IF THE ASSESSMENTS ARE FRAMED IN CONSEQUENCE OF THE SEARCH AND SEIZURE OPERATION BUT THE IMPORTANT FACT REMAINS THAT NOTHING WAS FOUND DURIN G THE COURSE OF SEARCH EXCEPT FEW LOOSE SHEETS FOUND IN THE RESIDEN CE OF THE DIRECTOR TO MAKE OUT A CASE AGAINST THE ASSESSEE FOR ALLEGED SUPPRESSION OF PRODUCTION OR SALES. IT IS ALSO TO BE TAKEN NOTE O F THE FACT THAT IN A.YS. 2007-08 AND 2008-09, NO INVESTIGATION HAS BEEN DONE BY THE REVENUE WHICH ARE IMMEDIATE NEXT ASSESSMENT YEARS AFTER THE SEARCH AND SEIZURE OPERATION AGAINST THE ASSESSEE COMPANY AND HENCE, IN OUR OPINION ABOVE FINDINGS AND OBSERVATION OF THE TRIBU NAL AS WELL AS THE HON'BLE HIGH COURT ARE ALSO IMPORTANT TO DECIDE THE PRESENT APPEALS MORE PARTICULARLY ON THE ADDITIONS BASED ON CONSUMP TION OF ELECTRICITY. 37. THE TRIBUNAL VIDE PARA 24 TOOK NOTE OF THE FACT THAT IN ASSESSMENT YEARS 2007-08 AND 2008-09, NO INVESTIGATION WAS DON E BY THE REVENUE AFTER THE SEARCH AND SEIZURE OPERATIONS IN THE IMMEDIATEL Y PRECEDING YEAR, WHEREIN DURING THE COURSE OF SEARCH, CERTAIN LOOSE SHEETS W ERE FOUND IN THE RESIDENCE OF THE DIRECTOR TO MAKE OUT CASE AGAINST THE ASSESS EE FOR ALLEGED SUPPRESSION OF PRODUCTION / SALES. THE TRIBUNAL WHILE DECIDING THE APPEAL IN M/S. SRJ PEETY STEELS PVT. LTD, IN TURN, RELYING ON THE RATI O LAID DOWN BY COORDINATE BENCH OF THE TRIBUNAL, DELETED THE ADDITION MADE ON ACCOUNT OF ALLEGED SUPPRESSION OF PRODUCTION / SALES IN ENTIRETY. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER:- 25. IN THE CASE OF ACIT VS. A.K. ALLOYS (P) LTD. ( SUPRA) IN WHICH THE ADDITIONS WERE MADE BY THE A.O. FOR ALLEGED SUPPRES SION OF PRODUCTION AND INVESTMENT IN PURCHASE OF RAW MATERIAL RELYING ON INFORMATION RECEIVED FROM CENTRAL EXCISE (LUDHIANA) AND WHEN MA TTER REACHED BEFORE THE TRIBUNAL AND IT IS HELD AS UNDER: 10. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE OR DER OF CIT CUSTOMS & EXCISE, BEFORE THE CUSTOMS, EXCISE & SERV ICE TAX APPELLATE TRIBUNAL WITH PRINCIPAL BENCH AT NEW DELH I (SUPRA). THE COPY OF THE ORDER OF THE CUSTOMS, EXCISE & SERV ICE TAX APPELLATE TRIBUNAL IS PLACED ON RECORD BY THE LEARN ED A.R. FOR THE ASSESSEE. THE CUSTOMS, EXCISE & SERVICE TAX APP ELLATE TRIBUNAL AFTER CONSIDERING THE FACTUAL ASPECTS OF T HE CASE, THE QUANTUM OF PRODUCTION, THE CONSUMPTION OF ELECTRICI TY OBSERVED THAT THERE IS NOTHING ON RECORD TO SHOW THAT HIGH P OWER CONNECTION SUPPORTED BY EVIDENCE WAS MADE ON A PART ICULAR DATE AND THAT RESULTED IN HIGHER AMOUNT OF PRODUCTI ON. IT WAS FURTHER OBSERVED BY THE CUSTOMS, EXCISE & SERVICE T AX 29 APPELLATE TRIBUNAL VIDE PARA 4.2 THAT SO FAR AS THE PRODUCTION QUANTUM IS CONCERNED, THERE IS ALSO NO EVIDENCE ON RECORD TO SHOW THAT THE AUTHORITIES INTERVENED LAWFULLY RECOR DING THE OUTPUT IN THE PRESENCE OF WITNESS. THE CUSTOMS, EXC ISE & SERVICE TAX APPELLATE TRIBUNAL HELD THAT THEREFORE, A HYPOTHETICAL CASE APPEARS TO HAVE BEEN MADE BY REVE NUE IN EXCESSIVE EXERCISE OF ITS JURISDICTION TO THE DETRI MENT OF JUSTICE. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNA L FURTHER CONSIDERED THE RETRACTION STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY AND VIDE PARA 6 HELD AS UNDER: '6. WE WOULD HAVE CERTAINLY COME TO THE RESCUE OF R EVENUE HAD THE STATEMENT BEEN RECORDED IN A MANNER KNOWN T O LAW AND COGENT EVIDENCE HAD BEEN BROUGHT TO RECORD TO P ROVE OUTPUT CLEARED CLANDESTINELY. NO COGENT EVIDENCE IS ON RECORD TO SHOW EITHER SUPPRESSION OF PURCHASE OF INPUT OR CLANDESTINE REMOVAL OF GOODS IN FOOL PROOF MANNER KNOWN TO LAW FOR WHICH, IT CAN BE PAINFULLY SAID THAT THE ADJUDICATION HAS NO LEGS TO STAND. BOTH THE APPEALS ARE THEREFORE, ALLOWED WITH CONSEQUENTIAL RELIEF, IF ANY.' 11. THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRI BUNAL CATEGORICALLY HELD THAT THE ELECTRICITY CONSUMPTION COULD NOT BE CRITERIA TO DETERMINE THE OUTPUT LAID DOWN IN R.A. CASTINGS, WHERE THE APPEAL OF THE REVENUE WAS DISMISSED BY TH E HON'BLE APEX COURT AS REPORTED IN 2011 (269) ELT A-108 (SC) . THE BASIS FOR THE ADDITION IN THE PRESENT CASE WAS THE INVESTIGATION REPORT OF THE CENTRAL EXCISE DEPARTMENT AND THE SUP PRESSION IN PRODUCTION CALCULATED BY THE SAID INVESTIGATING TEA M. THE ASSESSING OFFICER HAD COMPLETELY BASED ITS ADDI TION ON THE AFORESAID REPORT OF THE INVESTIGATING TEAM AND HAD ALSO SHOW CAUSED THE ASSESSEE TO ESTABLISH ITS POINT IN VIEW OF THE SAID REPORT OF THE INVESTIGATING TEAM. THE CUSTOMS, EXCI SE & SERVICE TAX APPELLATE TRIBUNAL (SUPRA) IN THE APPEA L FILED BY THE ASSESSEE AND ITS DIRECTOR HAS CATEGORICALLY HELD TH AT NO COGENT EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE THAT T HE OUTPUT HAD BEEN CLEARED CLANDESTINELY. FURTHER IT HAS BEEN HELD THAT THERE WAS NO COGENT EVIDENCE TO SHOW EITHER SUPPRES SION OF PURCHASE OF INPUT OR REMOVAL OF GOODS. IN VIEW OF T HE AFORESAID FINDINGS OF THE CUSTOMS, EXCISE & SERVICE TAX APPEL LATE TRIBUNAL IN ASSESSEE'S OWN CASE THERE IS NO MERIT I N ANY ADDITION BEING MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF THE ALLEGED SUPPRESSION IN PRODUCTION AND ALSO A LLEGED INVESTMENT IN PURCHASE OF RAW MATERIAL. IN VIEW THE REOF, WE HOLD THAT NO ADDITION ON ACCOUNT OF PROFIT ON THE SALE O F UNACCOUNTED PRODUCTION OR ON ACCOUNT OF UNEXPLAINED INVESTMENT MERITS TO BE MADE IN THE HANDS OF THE ASSESSEE. WE ARE ALSO I N AGREEMENT WITH THE OBSERVATIONS OF CIT (APPEALS) IN DELETING THE AFORESAID ADDITION AS NO INDEPENDENT EVIDENCE H AS BEEN BROUGHT ON RECORD TO ESTABLISH THAT THE ASSESSEE HA D, A) SUPPRESSED ITS PRODUCTION AND; B) IT MADE SALE OF I TS UNACCOUNTED PRODUCTION, OUTSIDE THE BOOKS OF ACCOUN T. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NOS.1 AND 2 RAISED BY THE REVENUE. 26. IN THE CASE OF ACIT VS. ARORA ALLOYS LTD. (SUPR A) THE ADDITION WAS MADE ON THE BASIS OF ELECTRICITY CONSUMPTION TO PRODUCE 1 MT OF INGOTS. THE CONFESSIONAL STATEMENT WAS ALSO GIVEN BY THE MANAGING DIRECTOR OF THE SAID COMPANY BEFORE THE CENTRAL EXC ISE AUTHORITIES. THE LD. CIT(A) ALLOWED THE ASSESSEES APPEAL. THE REVENUE CHALLENGED THE ORDER OF LD. CIT(A) BEFORE THE TRIBU NAL. IT WAS HELD THAT THERE WAS NO JUSTIFICATION TO SUPPORT THE SAID ADDI TION AND THE REVENUES APPEAL WAS DISMISSED. IN THE LIGHT OF OU R ABOVE DISCUSSION, WE ARE OF THE OPINION THAT THE ADDITIONS MADE BY TH E ASSESSING OFFICER 30 AND CONFIRMED BY LD. CIT(A) IN BOTH THE ASSESSMENT YEARS BASED ON THE ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS ON THE BASIS OF CONSUMPTION OF THE ELECTRICITY USED IN MANUFACTURIN G OF INGOTS/BILLETS ARE NOT SUSTAINABLE. WE, ACCORDINGLY, DELETE THE A DDITIONS MADE TOWARDS THE ALLEGED SUPPRESSION OF PRODUCTION AND S ALES AT ENTIRETY AND ALLOW THE GROUND NOS. 3, 4, 5, 6 & 8 IN THE A.Y . 2007-08 AND GROUND NOS. 2,3,4 & 6 IN THE A.Y. 2008-09. 38. THE TRIBUNAL THEREAFTER, HELD THAT THERE WAS NO MERIT IN THE REJECTION OF BOOKS OF ACCOUNT AND APPLICATION OF GROSS PROFIT TO DETERMINE THE INCOME IN THE HANDS OF THE ASSESSEE. THE TRIBUNAL ALSO GAVE A FI NDING THAT SINCE THE ADDITIONS MADE IN THE HANDS OF THE ASSESSEE HAVE BE EN DELETED, THERE WAS NO MERIT IN ANY ADDITION ON ACCOUNT OF UNDISCLOSED INV ESTMENT IN RESPECT OF THE UNDISCLOSED TURNOVER. THE TRIBUNAL VIDE PARAS 27 T O 29 HELD AS UNDER:- 27. THE NEXT ISSUE IS THE REJECTION OF BOOKS OF AC COUNT BY THE ASSESSING OFFICER IN BOTH THE ASSESSMENT YEARS. WE FIND THAT THE ONLY REASON FOR REJECTION OF THE BOOKS OF ACCOUNT WAS TH E ALLEGED SUPPRESSION OF PRODUCTION/SALES AND WHICH WAS DETER MINED ON THE BASIS OF THE ADJUDICATION ORDER PASSED BY THE CCE, AURANGABAD AS WELL AS THE CONSUMPTION OF THE ELECTRICITY USED IN THE MANUFACTURING OF THE INGOTS/BILLETS RELYING ON THE TECHNICAL OPINION OF DR. BATRA, IIT, KANPUR. NO OTHER REASONS ARE GIVEN BY THE ASSESSING OFFICER. WE HAVE ALREADY HELD THAT THE ASSESSING OFFICER WAS NOT JUS TIFIED IN MAKING THE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION /SALES. WE, THEREFORE, HOLD THAT THE REJECTION OF THE BOOKS OF ACCOUNT ON ABOVE REASON CANNOT BE UPHELD. WE, ACCORDINGLY, ALLOW GR OUND NO. 7 IN THE A.Y. 2007-08 AND GROUND NO. 5 IN THE A.Y. 2008-09. 28. THE NEXT ISSUE IS THE PERCENTAGE OF THE GROSS P ROFIT ESTIMATED BY THE LD. CIT(A) ON THE ALLEGED SUPPRESSED SALES A ND SAID ISSUE ARISES FROM GROUND NO. 9 IN THE A.Y. 2007-08 AND GR OUND NO. 7 IN THE A.Y. 2008-09 ARE ON. AS THE ASSESSEE HAS SUCCEEDED ON THE MAIN GROUNDS AS ENTIRE ADDITIONS MADE BY THE ASSESSING O FFICER ARE DELETED, THE GROUND NO. 9 IN THE A.Y. 2007-08 AND GROUND NO. 7 IN THE A.Y. 2008-09 BECOME INFRUCTUOUS. 29. IN GROUND NO. 10, THE ASSESSEE HAS RAISED THE O BJECTION FOR MAKING THE ADDITION OF RS.37,69,582/-. THE SAID AD DITION IS MADE BY THE LD. CIT(A). HE HAS OBSERVED THAT THERE IS AN E LEMENT OF THE UNDISCLOSED INVESTMENT IN RESPECT OF THE UNDISCLOSE D TURNOVER WHICH IS ESTIMATED AS AN AVERAGE UNDISCLOSED TURNOVER OF THE HALF PERIOD OF THE EARLIER YEAR UNDER APPEAL. THE LD. CIT(A) HAS OBSE RVED THAT THE UNDISCLOSED SALE FOR THE EARLIEST YEAR UNDER APPEAL ARE OF RS.39,20,36,546/- AND THE SAID INVESTMENT REQUIRED FOR PRODUCTION OUT OF BOOKS, THEREFORE, WORKED OUT RS.37,69,582/-. IN FACT, THE SAID ADDITION IS MADE BY THE LD. CIT(A) AS HE HAS CONFIR MED THE ALLEGED SUPPRESSION OF PRODUCTION/SALES AS HELD BY THE ASSE SSING OFFICER. AS THE ASSESSEE HAS SUCCEEDED IN GETTING THE RELIEF BY DELETING THE ENTIRE ADDITIONS TOWARDS ALLEGED SUPPRESSION OF PRODUCTION AND SALES, HENCE, THIS ADDITION DOES NOT SURVIVE AND SAID ADDITION IS ALSO DELETED. WE, ACCORDINGLY, ALLOW THE GROUND NO. 10 TAKEN BY THE A SSESSEE. 39. THE TRIBUNAL ALSO DISMISSED THE APPEAL OF THE R EVENUE AGAINST THE ESTIMATION OF GROSS PROFIT BY THE CIT(A) OBSERVING AS UNDER:- 31. WE HAVE HEARD THE PARTIES. THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ESTIMATION OF GP BY LD. CIT( A). WE HAVE ALREADY ALLOWED THE GROUNDS TAKEN BY THE ASSESSEE O N THE ALLEGED SUPPRESSION OF THE PRODUCTION/SALES. AS THE ASSESS EE HAS SUCCEEDED ON THE BASIC ADDITIONS, THE GROUNDS TAKEN BY THE RE VENUE DO NOT SURVIVE AS THE ENTIRE ADDITIONS ARE DELETED IN BOTH THE ASSESSMENT YEARS BY ALLOWING THE GROUNDS TAKEN BY THE ASSESSEE . ACCORDINGLY, ALL THE GROUNDS OF THE REVENUE IN BOTH APPEALS ARE DISM ISSED. 31 40. THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATI VE FOR THE ASSESSEE BEFORE US WAS THAT THE ISSUE RAISED IN THE PRESENT APPEALS IS SQUARELY COVERED BY THE RATIO LAID DOWN IN M/S. SRJ PEETY STEELS PVT . LTD. (SUPRA). IT WAS FURTHER POINTED OUT BY HIM THAT IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD., THERE WAS NO INVESTIGATION BY THE DGCEI AND FURTHER THERE WAS NO ORDER OF SETTLEMENT COMMISSION. HOWEVER, THE CCE, AURANGABA D HAD PASSED AN ORDER AGAINST THE ASSESSEE, BUT THERE WAS NO CASE O F CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY AGAINST TH E ASSESSEE. THE LD. SPECIAL AR ADMITTED THAT THERE WAS NO EVIDENCE WITH THE EXCISE DEPARTMENT OR THE INCOME-TAX DEPARTMENT REGARDING CLANDESTINE REMOVAL OF MATERIALS WITHOUT PAYMENT OF EXCISE DUTY. HOWEVER, BECAUSE O F HUGE FLUCTUATION IN ELECTRICITY CONSUMPTION AND PRODUCTION OF INGOTS / BILLETS, ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE. HOWEVER, IN OMSAIRAM ST EEL & ALLOYS PVT. LTD., IT WAS FAIRLY ADMITTED BY THE LEARNED AUTHORIZED REPRE SENTATIVE FOR THE ASSESSEE THAT THERE WAS INVESTIGATION BY THE DGCEI AND IN AS SESSMENT YEARS 2006-07 AND 2007-08, THE ASSESSEE HAD FILED THE PETITION BE FORE THE SETTLEMENT COMMISSION, WHICH WAS ACCEPTED. HOWEVER, IN ASSESS MENT YEARS 2005-06 AND 2008-09, THERE WAS NO SUCH PETITION FILED BEFOR E THE SETTLEMENT COMMISSION. 41. WE FIND THAT THE ASSESSING OFFICER IN THE PRESE NT CASE BEFORE US HAD MADE THE ADDITION ON ACCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY BASED ON THE REPORT OF DR. BATRA. THE ADDITION IN THE HANDS OF SISTER CONCERN M/S. SRJ PEETY STEELS PVT. LTD. WAS MADE ON THE BASIS OF THE REPORT OF ONE DR. BATRA WITH REGARD TO ELECTRIC CONSUMPTION AND THE THIRD M EMBER OF CESTAT HAD DELETED THE AFORESAID ADDITION MADE UNDER THE EXCIS E LAW. SIMILARLY, IN THE CASE OF ASSESSEE BEFORE US, THERE IS ORDER OF CCE, AURANGABAD AND OF CESTAT AND THE ASSESSING OFFICER WORKED OUT THE ADD ITION ON THE BASIS OF ERRATIC CONSUMPTION OF ELECTRICITY AS DETERMINED BY CCE, AURANGABAD. FOLLOWING THE SAME LINE OF REASONING AS IN THE ORDE R OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON SURMISES. BOTH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AND LD. SPECIAL AR HAS RAISED IDENTICAL AR GUMENTS AS IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SINCE THE TRIBUN AL HAS ALREADY DECIDED THE ISSUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA), T HE RATIO OF THE SAID DECISION IS APPLICABLE TO THE FACTS OF THE PRESENT CASE. HO WEVER, ADDITIONAL PRODUCTION RELATING TO THE DECLARATION MADE BEFORE THE SETTLEM ENT COMMISSION IS TO BE ADDED IN THE HANDS OF THE ASSESSEE, AS ADMITTED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. 42. ANOTHER OBJECTION RAISED BY THE LD. SPECIAL AR BEFORE US DURING THE COURSE OF HEARING OF THE BUNCH OF APPEALS WAS THAT IT HAD MOVED MISCELLANEOUS APPLICATION AGAINST THE ORDER OF TRIB UNAL DATED 16.01.2015 AND THE HEARING OF THE PRESENT APPEALS BE KEPT IN ABEYA NCE. AFTER HEARING THE APPEALS IN THE PRESENT BUNCH OF APPEALS, THE MISCEL LANEOUS APPLICATION FILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. ( SUPRA) WAS ALSO FIXED FOR HEARING AND THE SAME WAS HEARD ON 19.06.2015. WE H AVE BY AN ORDER OF EVEN DATE DISMISSED THE MISCELLANEOUS APPLICATION F ILED BY THE REVENUE IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AFTER CONSI DERING THE SUBMISSIONS OF BOTH THE AUTHORIZED REPRESENTATIVES. WE HAVE BY AN ORDER OF EVEN DATE HELD THAT THERE IS NO MERIT IN THE SAID MISCELLANEOUS AP PLICATION FILED BY THE REVENUE AND NO REMEDY IS AVAILABLE TO THE REVENUE U NDER SECTION 254(2) OF THE ACT. IN VIEW THEREOF, THE NEXT OBJECTION OF TH E LD. SPECIAL AR FOR NOT RELYING ON THE ORDER OF M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) ALSO STANDS DISMISSED. 43. ANOTHER ASPECT OF THE ISSUE IN RELATION TO THE ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTION, RAISED BEFORE US IS THAT WHE RE THE ASSESSING OFFICER HAD EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WIT HOUT PAYMENT OF EXCISE DUTY, THE ADDITION COULD BE UPHELD IN THE HANDS OF THE ASSESSEE BY EXTRAPOLATING THE SALES FOR PERIOD OF 300 DAYS. TH E LD. SPECIAL AR FOR THE SAID PROPOSITION RELIED ON THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2006-07. THE CASE OF T HE REVENUE BEFORE US WAS THAT WHERE THE ASSESSEE HAD ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY BEFORE THE SETTLEMEN T COMMISSION FOR PART OF 32 THE PERIOD, THEN IN VIEW OF THE ORDER OF THE SETTLE MENT COMMISSION AND ALSO SINCE THE ASSESSEE HAD ADMITTED TO ADDITIONAL INCOM E ON SUCH ACCOUNT BEFORE THE ASSESSING OFFICER, THE SALES FOR THE ENTIRE YEA R SHOULD BE EXTRAPOLATED. THE BASIS FOR DECLARATION OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS ON ACCOUNT OF SEARCH AND SEIZURE PROCEEDINGS CONDUCTED BY DGCEI ON CERTAIN BROKERS AND SUB-BROKERS. CONSE QUENT THERETO, SHRI SRJ PEETY, MANAGING DIRECTOR OF M/S. SRJ PEETY STEELS P VT. LTD. ADMITTED TO THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMEN T OF EXCISE DUTY AND APPROACHED THE SETTLEMENT COMMISSION FOR PAYMENT OF EXCISE DUTY ON THE SAID AMOUNT. THE SETTLEMENT COMMISSION ACCEPTED TH E PETITION OF THE ASSESSEE, BUT ALSO LEVIED PENALTY. THE ASSESSEE BE FORE THE ASSESSING OFFICER ADMITTED THAT THE ADDITIONAL INCOME IN RESPECT OF T HE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, IS TO B E ADDED IN THE HANDS OF THE ASSESSEE. ALL THIS INFORMATION WAS AVAILABLE BEFOR E THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT NO OTHER INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER WHILE COM PLETING THE ASSESSMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICE R ON THE OTHER HAND, WAS OF THE VIEW THAT THE ASSESSEE HAD NOT CORRECTLY DIS CLOSED THE PRODUCTION OF INGOTS / BILLETS. THE BASIS FOR SUCH ASSUMPTION WA S THE ELECTRICITY CONSUMPTION, FOR WHICH THE ASSESSING OFFICER PLACED RELIANCE ON THE REPORT OF DR. BATRA AND ORDER OF CCE, AURANGABAD. THE ASSESS ING OFFICER APPLYING THE FORMULA WORKED OUT THE SUPPRESSED PRODUCTION AND SA LES IN THE HANDS OF THE ASSESSEE. WE IN THE PARAS HEREINABOVE HAVE ALREADY ADJUDICATED THE ISSUE THAT NO ADDITION ON ACCOUNT OF SUPPRESSED PRODUCTIO N / SALES ON SUCH ACCOUNT COULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD . SPECIAL AR ON THE OTHER HAND, STRESSED THAT WHERE THE ASSESSING OFFICER HAD THE INFORMATION OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND ALSO BECAUSE OF THE ADMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE SALES FOR THE PERIOD OF 300 DAYS SHOULD BE EXTRAPOL ATED IN THE HANDS OF THE ASSESSEE. HE STRESSED THAT EVEN WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPP RESSION OF INCOME WAS FOUND FOR THE PART OF THE YEAR, THEN THE ASSESSING OFFICER CAN ESTIMATE THE ADDITIONAL INCOME FOR WHOLE OF THE YEAR. MERELY BE CAUSE THE ASSESSING OFFICER HAD ADOPTED ANOTHER METHODOLOGY OF SUPPRESSION, THE ADDITION IN THE HANDS OF THE ASSESSEE COULD BE SUSTAINED ON THE BASIS OF EXT RAPOLATION OF SALES FOR 300 DAYS, IN VIEW OF THE ADMISSION OF THE ASSESSEE OF C LANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND SUPPRES SION OF INCOME. 44. THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS DETECTED BY THE EXCISE AUTHORITIES DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN BROKERS, HO WEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSES SEE. IN ORDER TO BUY PEACE OF MIND, THE ASSESSEE DECLARED THE SAID AMOUNT VIDE PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH HAS BEEN ACCEPTED BY T HE SETTLEMENT COMMISSION IN TOTO. THE LD. SPECIAL AR OBJECTED TO THE PLEA OF ASSESSEE THAT DECLARATION WAS TO BUY PEACE OF MIND, BUT WE FIND N O MERIT IN THE SAME, SINCE THE OBJECT OF MOVING PETITION BEFORE THE SETTLEMENT COMMISSION IS TO SETTLE THE DISPUTE. IN CASES WHERE ANY SETTLEMENT PETITION IS MOVED BY THE CLAIMANTS, THE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFE R MADE BY THE CLAIMANT AND WHERE ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER, THEN THE FIGURES OF SETTLEMENT CAN BE INCREASED. H OWEVER, IN THE CASE OF THE ASSESSEE, OFFER OF THE ASSESSEE HAS BEEN ACCEPTED F OR THE FINANCIAL YEAR AND THE SAME CANNOT BE SAID TO BE RESTRICTED TO THE NUM BER OF DAYS FOR WHICH IT WAS OFFERED. THE BASIS OF ANY SETTLEMENT IS THE OF FER MADE BY THE CLAIMANT AND/OR THE EVIDENCE FOUND AGAINST THE PERSON OFFERI NG THE SETTLEMENT AND WHERE THE EVIDENCE HAS BEEN FOUND FOR PART OF THE Y EAR, SUCH SETTLEMENT BEING ACCEPTED IS RELATABLE TO THE YEAR UNDER CONSIDERATI ON. IN CASES WHERE THE PETITION IS ACCEPTED IN THE HANDS OF THE ASSESSEE B Y THE SETTLEMENT COMMISSION, THEN NO FURTHER ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY OR SUPPRESSED SALES FOR THE BALANCE PERIOD, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE FOR THE BALANCE PERIOD. 45. ANOTHER ASPECT OF THE ISSUE IS THAT THOUGH THE FACTUM OF THE ASSESSEE FILING THE PETITION BEFORE THE SETTLEMENT COMMISSIO N, WAS BEFORE THE ASSESSING OFFICER, EVEN ADDITIONAL INCOME ON SUCH O FFER OF SETTLEMENT WAS 33 OFFERED BY THE ASSESSEE BEFORE THE ASSESSING OFFICE R, HOWEVER, NO FURTHER INQUIRY, INVESTIGATION OR ACTION WAS TAKEN BY ASSES SING OFFICER IN THIS REGARD. IN THE ABSENCE OF THE SAME, THE ISSUE RAISED IN THE PRESENT APPEAL IS WHETHER ANY EXTRAPOLATION OF SALES FOR THE BALANCE YEAR ON THE BASIS OF EVIDENCE FOUND FOR THE PART OF THE YEAR IS JUSTIFIED OR NOT. THE ANSWER, IN OUR OPINION, HAS TO BE IN NEGATIVE. 46. THE LD. SPECIAL AR VEHEMENTLY RELIED ON THE RAT IO LAID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE REPORTED IN 137 TTJ (PUNE) 627, WHICH IN TURN HAS BEEN APPROVED BY THE HONBLE BOMBAY HIGH C OURT. IT MAY BE POINTED OUT THAT THE FACTS OF THE CASE BEFORE THE T RIBUNAL IN ASSESSMENT YEAR 2006-07 ARE AT VARIANCE. THE ADDITION IN THE HANDS OF THE ASSESSEE WAS MADE ON THE BASIS OF SEARCH AND SEIZURE ACTION CARR IED OUT BY THE INCOME-TAX DEPARTMENT AND THE DOCUMENTS FOUND DURING THE COURS E OF SEARCH, WHICH WERE ADMITTED BY THE ASSESSEE TO REFLECT SUPPRESSIO N OF SALES. ON THE BASIS OF AFORESAID DOCUMENTS, THE INCOME FOR THE YEAR WAS EXTRAPOLATED, WHICH ORDER OF THE TRIBUNAL WAS APPROVED BY THE HONBLE BOMBAY HIGH COURT. HOWEVER, FOR THE YEAR UNDER CONSIDERATION, THERE WAS NO SEAR CH AND SEIZURE OPERATION CARRIED OUT BY THE INCOME-TAX DEPARTMENT AGAINST TH E ASSESSEE AND ALSO NO INVESTIGATION OR INQUIRY WAS MADE BY THE ASSESSING OFFICER, AS STATED EARLIER. IN THE ABSENCE OF ANY EVIDENCE COLLECTED AGAINST TH E ASSESSEE, MERELY BECAUSE THE ADDITION WAS MADE IN THE HANDS OF THE A SSESSEE IN A PRECEDING YEAR, WE FIND NO MERIT IN THE SUBMISSIONS OF THE AS SESSEE THAT FOLLOWING THE SAME RATIO, EXTRAPOLATION OF SALES FOR THE ASSESSME NT YEAR 2007-08 SHOULD BE MADE IN THE HANDS OF THE ASSESSEE, IN VIEW OF THE S ETTLEMENT PETITION BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION. THE PER USAL OF THE ASSESSMENT ORDER AND THE ORDER OF CIT(A) REFLECTS NO SUCH BASI S WAS ADOPTED FOR MAKING THE ADDITION IN THE HANDS OF THE ASSESSEE. THE SOL E BASIS ON WHICH THE ADDITION IN THE HANDS OF THE ASSESSEE MADE WAS ON A CCOUNT OF ERRATIC CONSUMPTION OF ELECTRICITY. UNDOUBTEDLY, BOTH THE ASPECTS I.E. THE PETITION MADE BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSI ON PURSUANT TO SEARCH CONDUCTED BY THE DGCEI AND ALSO THE OTHER BASIS I.E . ERRATIC CONSUMPTION OF ELECTRICITY, WERE BEFORE THE ASSESSING OFFICER. HO WEVER, THE ASSESSING OFFICER ADOPTED THE SECOND ISSUE IN THE HANDS OF THE ASSESS EE AND MADE THE AFORESAID ADDITION, WHICH WE IN THE PARAS HEREINABO VE HAD ALREADY DELETED. THE LD. SPECIAL AR POINTED OUT THAT THE SAID ACTION OF THE ASSESSING OFFICER WAS ONE OF THE METHODOLOGIES FOR WORKING OUT THE AD DITIONAL INCOME OF THE ASSESSEE. WE FIND NO MERIT IN THE STAND OF THE LD. SPECIAL AR SINCE NO INVESTIGATION OR INQUIRY WAS CARRIED OUT BY THE ASS ESSING OFFICER AND MERELY ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT C OMMISSION, WHICH IN TURN HAS BEEN ACCEPTED, NO FURTHER ADDITION CAN BE MADE IN T HE HANDS OF THE ASSESSEE IN THE ABSENCE OF ANY INCRIMINATING MATERIAL FOUND FOR THE BALANCE PERIOD. 47. RELIANCE IN THIS REGARD IS PLACED UPON THE RATI O LAID DOWN IN RAVI FOODS PVT. LTD. VS. CCE, HYDERABAD (SUPRA). IN THE FACTS OF THE SAID CASE, CERTAIN DOCUMENTS WERE FOUND BY THE INCOME-TAX DEPARTMENT P URSUANT TO SEARCH AND SEIZURE ACTION, WHICH INDICATED CLEARANCE IN SALES, ON THE BASIS OF WHICH THE ADDITIONAL INCOME WAS ADDED IN THE HANDS OF THE ASS ESSEE. THE SAID INFORMATION WAS FORWARDED TO THE CENTRAL EXCISE DEP ARTMENT PURSUANT TO WHICH, ORDER LEVYING ADDITIONAL EXCISE DUTY WAS PAS SED BY THE EXCISE COMMISSIONER. HOWEVER, THE TRIBUNAL CANCELLED THE EXCISE DEMAND ON THE GROUND THAT THERE WAS NO CORROBORATIVE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY WAS FOUND F ROM THE POSSESSION OF THE ASSESSEE BY THE EXCISE AUTHORITIES. 48. FOLLOWING THE SAME ANALOGY OF REASONING, WHERE THE EVIDENCE OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN FOUND BY THE EXCISE DEPARTMENT, IN RESPECT OF SALE OF GOODS FOR A PARTICULAR QUANTITY AND FOR A PARTICULAR PERIOD, THE SAME COUL D NOT BE RELIED UPON AS EVIDENCE, WHILE EXTRAPOLATING THE SALES AND THE ADD ITIONAL INCOME THEREON IN THE HANDS OF THE ASSESSEE DURING THE INCOME-TAX PRO CEEDINGS. THE ASSESSING OFFICER DOES NOT HAVE ANY EVIDENCE FOR SU PPRESSED PRODUCTION AND EVEN AFTER THE ORDER OF SETTLEMENT COMMISSION, THE ASSESSING OFFICER HAD NOT INVESTIGATED OR BROUGHT ANY MATERIAL ON RECORD ESTA BLISHING SUPPRESSED PRODUCTION AND / OR ITS SALE OUTSIDE THE BOOKS OF A CCOUNT. 34 49. THE LD. SPECIAL AR TIME AND AGAIN STRESSED THAT THE ASSESSEE HAD MADE ADMISSION BEFORE THE ASSESSING OFFICER AND THI S WAS THE EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. THE ALLEGED ADMISSION BEFORE THE ASSESSING OFFICER WAS ONLY BY WAY OF THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE, WHICH WAS RELATABLE TO THE CLANDESTINE RE MOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY ADMITTED BEFORE THE DGCEI AN D OFFERED BY WAY OF PETITION BEFORE THE SETTLEMENT COMMISSION. NO STAT EMENT OF DIRECTORS OF THE ASSESSEE COMPANY WAS RECORDED EITHER BY ASSESSING O FFICER OR CIT(A) DURING THE COURSE OF ASSESSMENT PROCEEDING. ACCORDINGLY, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN THIS REGARD. THE ADDITION AT BEST IS TO BE RESTRICTED TO THE ADDITIONAL INCOME O FFERED BY THE ASSESSEE. 50. IN OUR CONSIDERED OPINION, THE ISSUE IN HAND IS TO BE DECIDED ON THE BASIS OF FINDINGS OF THE ASSESSING OFFICER AND CIT( A) AND THE TRIBUNAL CANNOT TRAVERSE BEYOND THE ORDERS OF ASSESSING OFFICER AND CIT(A). ADMITTEDLY, THE PARTIES CAN RAISE AN ADDITIONAL PLEA BEFORE THE TRI BUNAL JUSTIFYING THE ADDITION. HOWEVER, THE SAID PLEA HAS TO BE DECIDED KEEPING IN MIND THE FACTS OF THE CASE. THOUGH BOTH THE ASSESSING OFFICER AND CIT(A) HAD NOT MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON THE BASIS OF PETITION FILED BEFORE THE SETTLEMENT COMMISSION, BUT HAD ADOPTED THE ERRATIC CONSUMPTION OF ELECTRICITY AS BASIS TO MAKE THE ADDITION, WE HAVE ADJUDICATED THE ALTERNATE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AND DISMISSED THE SAME. 51. NOW, WE COME TO THE RELIANCE PLACED UPON BY BOT H THE AUTHORIZED REPRESENTATIVES IN SUPPORT OF INDIVIDUAL PROPOSITIO N VIS--VIS THE ADDITION ON ACCOUNT OF EXTRAPOLATION OF SALES FOR THE PERIOD OF 300 DAYS. 52. THE LD. SPECIAL AR FURTHER RELIED ON SERIES OF DECISIONS UNDER THE EXCISE AUTHORITIES FOR THE PROPOSITION THAT THE CON FESSIONAL STATEMENT BEFORE THE EXCISE DEPARTMENT WAS AN IMPORTANT PIECE OF EVI DENCE. WE ARE IN AGREEMENT WITH THE SAID PROPOSITION LAID DOWN BY TH E HONBLE SUPREME COURT IN PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA AND ANOTHER (SUPRA), BUT THE STATEMENT MADE BEFORE ANY OF THE A UTHORITIES IS LIMITED TO THE AMOUNTS SURRENDERED VIDE THE SAID SETTLEMENT AND NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE FOR EXTRAPOLATING THE SA ME FOR FULL YEAR AND FOR THE BALANCE YEAR AND IN OTHER YEARS, OTHER THAN THE YEA R IN WHICH THE SAID SETTLEMENT WAS OFFERED. IN THIS REGARD, WE FIND SU PPORT FROM THE RATIO LAID DOWN BY THE BANGALORE BENCH OF TRIBUNAL IN ANJANEYA BRIC K WORKS VS. CIT (SUPRA), WHEREIN IT HAS BEEN HELD THAT MERE EXISTENCE OF EVI DENCE OF CONCEALMENT IN THE NEXT ASSESSMENT YEAR COULD NOT BE THE BASIS FOR ESTIMATING INCOME IN ANY OTHER ASSESSMENT YEARS. 53. FURTHER, BEFORE THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA), THE ISSUE WAS IN RELATION TO THE EVIDENCE FOUND OF UNACCOUNTED SALES FOR PART OF THE PERIOD DURING THE COURSE OF SEARCH. THE ASSESSING OFFICER ON THE SAID BASIS ASSUMED UNACCOU NTED SALES DURING THE ENTIRE YEAR, WHICH WAS DELETED BY THE CIT(A) AND TH E TRIBUNAL. THE HONBLE DELHI HIGH COURT OBSERVED THAT ASSUMPTION OF ASSESS ING OFFICER MAY HAVE PERHAPS BEEN VALID IF THE SEARCH HAD BEEN CONDUCTED AFTER THE ACCOUNTING YEAR AND THE BOOKS OF ACCOUNT HAD BROUGHT SOME DISC REPANCY. 54. SIMILAR PROPOSITION HAS BEEN LAID DOWN BY THE H ONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH AND CO. (SUPRA). 55. FURTHER, THE BILASPUR BENCH OF THE TRIBUNAL IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA) DECIDED SIMILAR ISSUE OF THE INFORMATION AVAILABLE WITH THE CENTRAL EXCISE DEPARTMENT, WHERE IN UNACCOUNTED SALES WAS ESTIMATED FOR 56 DAYS AND THE ASSESSING OFFICER EST IMATED THE SALES FOR THE REMAINING PERIOD. THE ADDITION WAS DELETED IN THE HANDS OF THE ASSESSEE AND WAS RESTRICTED TO THE INCOME DECLARED BY THE ASSESS EE ON THE BASIS OF PAPERS SEIZED, FOR WHICH THE ASSESSEE HAD FILED A PETITION BEFORE THE SETTLEMENT COMMISSION AND INCOME ON THAT ACCOUNT WAS DECLARED BY THE ASSESSEE. THE TRIBUNAL HELD THAT NO FURTHER ADDITION COULD BE MAD E IN THE HANDS OF THE 35 ASSESSEE FOR THE BALANCE PERIOD. THE TRIBUNAL FURT HER HELD THAT HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMATION OF GROSS PRO FIT MERELY ON GUESS WORK AND PRESUMPTION WAS NOT SUSTAINABLE IN LAW. NO DET AILS WERE AVAILABLE TO THE ASSESSING OFFICER TO ARRIVE AT SUCH FIGURE OR HAD T HERE BEEN ANY CONCEALED SALES FOR 9 MONTHS, IT COULD HAVE BEEN DETECTED BY THE CENTRAL EXCISE AUTHORITY DURING THEIR SEARCH OPERATIONS. THEREFOR E, THE ADDITION MADE BY THE ASSESSING OFFICER IS PURELY BASED ON GUESS WORK, PR ESUMPTION AND SURMISES AND NOT ON THE BASIS OF ANY MATERIAL FOUND DURING T HE COURSE OF SEARCH OPERATION CARRIED OUT BY THE CENTRAL EXCISE AUTHORI TIES. SUCH ADDITION BASED ON HYPOTHETICAL CALCULATION OF TURNOVER AND ESTIMAT ION OF GP ON PRESUMPTION AND SURMISES WERE NOT SUSTAINABLE. THE TRIBUNAL DI STINGUISHED THE RATIO LAID DOWN IN CST VS. H.M. ESUFALI H.M. ABDULALI (SUPRA). THE LD. SPECIAL AR RELIED ON THE SAID DECISION AND IN VIEW OF THE DECI SION OF COORDINATE BENCH ON SIMILAR ISSUE AS BEFORE US, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR. 56. THE LD. SPECIAL AR DURING THE COURSE OF ARGUMEN TS BEFORE THE TRIBUNAL IN MISCELLANEOUS APPLICATION FILED IN M/S. SRJ PEET Y STEELS PVT. LTD. VIDE MA NO.17/PN/2015 HAD RAISED THE ISSUE OF EXTRAPOLATION OF SALES FOR 300 DAYS IN VIEW OF THE ASSESSEE HAVING ADMITTED TO CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY AND THEREAFTER, FILI NG A PETITION BEFORE THE SETTLEMENT COMMISSION. 57. THE PLEA OF THE REVENUE RAISED IN THE MISCELLAN EOUS APPLICATION WAS REJECTED AS NO SUCH PLEA WAS TAKEN BY THE DEPARTMEN T DURING THE APPELLATE PROCEEDINGS BEFORE THE TRIBUNAL AND WAS RAISED FOR THE FIRST TIME IN THE MISCELLANEOUS APPLICATION. HOWEVER, IN THE INTERES T OF JUSTICE, THE SAID ISSUE OF EXTRAPOLATION OF SUPPRESSED SALES WAS ADJUDICATE D BY THE TRIBUNAL BY OBSERVING AS UNDER:- 41. BEFORE CLOSING THE ISSUE, IN THE INTEREST OF J USTICE, WE WOULD LIKE TO ADJUDICATE THE ISSUE OF EXTRAPOLATION OF SUPPRES SED SALES ON ACCOUNT OF SETTLEMENT PETITION MADE BY THE ASSESSEE. ADMIT TEDLY, DURING THE COURSE OF SEARCH AND SEIZURE OPERATION ON CERTAIN B ROKERS, EVIDENCES OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WAS FOUND AGAINST THE ASSESSEE. HOWEVER, NO SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AGAINST THE ASSESSEE, BUT THE ASSESSEE CLAIMS THAT IN ORDER TO BUY PEACE OF MIND, IT HAD D ECLARED THE SAID AMOUNT BY WAY OF PETITION BEFORE THE SETTLEMENT COM MISSION. THE SAID OFFER MADE BY THE ASSESSEE WAS ACCEPTED IN TOT O. IT MAY BE NOTED THAT THE EXCISE AUTHORITIES HAVE THE POWER TO RE-VISIT THE OFFER MADE BY THE ASSESSEE, IN CASE, ANY ADVERSE MATERIAL IS AVAILABLE AGAINST THE PERSON MAKING THE OFFER. IT MAY ALSO B E NOTED THAT THE SETTLEMENT ACCEPTED IN THE HANDS OF THE ASSESSEE IS FOR THE FINANCIAL YEAR AND IS NOT RESTRICTED TO THE NUMBER OF DAYS FO R WHICH IT HAS OFFERED. IN OTHER WORDS, ONCE A PERSON MAKES A SET TLEMENT PETITION FOR A PARTICULAR YEAR ON ACCOUNT OF THE EVIDENCE FOUND FOR PART OF THE PERIOD AND ONCE THE PETITION IS ACCEPTED IN THE HANDS OF T HE ASSESSEE, NO FURTHER ADDITION CAN BE MADE ON ACCOUNT OF ALLEGED CLANDESTINE REMOVAL OF GOODS OR SUPPRESSED SALES, IN THE ABSENC E OF EVIDENCE FOR THE BALANCE PERIOD. THE ABOVE SAID RATIOS HAVE BEE N LAID DOWN IN CHATTISGARH STEEL CASTING PVT. LTD. V. ACIT (SUPRA), HONBLE BOMBAY HIGH COURT IN CIT VS. C.J. SHAH & CO. (SUPRA), HON BLE DELHI HIGH COURT IN CIT VS. ANAND KUMAR DEEPAK KUMAR (SUPRA). THE LD. SPECIAL AR HAD PLACED RELIANCE ON THE DECISION OF H ONBLE BOMBAY HIGH COURT IN CIT VS. DR.M.K.E. MEMON (SUPRA) WHILE ARGUING THE ISSUE NO.2 I.E. ESTIMATION OF SUPPRESSED PRODUCTION IS MIS-PLACED. THE HONBLE BOMBAY HIGH COURT IN THE SAID DECISION CONS IDERED THE SCOPE OF ASSESSMENT UNDER CHAPTER XIV-B AND HELD THAT WHA T IS TO BE 36 ASSESSED UNDER THE SAID CHAPTER IS UNDISCLOSED INCO ME OF THE BLOCK PERIOD AND NOT THE TOTAL INCOME OR LOSS OF THE PREV IOUS YEAR REQUIRED TO BE ASSESSED UNDER REGULAR ASSESSMENT UNDER SECTION 143(3) OF THE ACT. THE HONBLE BOMBAY HIGH COURT HELD THAT SUCH REGULAR ASSESSMENT STANDS ON A DIFFERENT FOOTING IN CONTRAS T TO THE EXERCISE UNDERTAKEN BY THE ASSESSING OFFICER UNDER CHAPTER X IV-B, WHERE THE ASSESSING OFFICER HAD TO ASSESS ONLY THE UNDISCLOSE D INCOME. HOWEVER, THE HONBLE BOMBAY HIGH COURT FURTHER HELD THAT UNDER CHAPTER XIV-B, THE ASSESSING OFFICER CANNOT ESTIMAT E THE UNDISCLOSED INCOME ON AN ARBITRARY BASIS. WE FIND NO MERIT IN THE PLEA RAISED BY THE LD. SPECIAL AR IN THIS REGARD AS THE FACTS OF T HE SAID CASE ARE DIFFERENT FROM THE FACTS OF THE PRESENT CASE. 42. EVEN ON MERITS, THE REVENUE HAS NO CASE AGAINST THE ASSESSEE. THE RELIANCE PLACED UPON BY THE LD. SPEC IAL AR ON THE RATIO LAID DOWN IN ASSESSEES OWN CASE RELATING TO ASSESS MENT YEAR 2006-07 IS MISPLACED AS THE ADDITION IN THE HANDS OF THE AS SESSEE IN THAT YEAR WAS MADE ON ACCOUNT OF SEARCH AND SEIZURE OPERATION S CARRIED OUT BY THE INCOME-TAX DEPARTMENT, WHEREIN SALES OUTSIDE BO OKS WERE FOUND FOR FEW DAYS. HOWEVER, NO INDEPENDENT INVESTIGATIO N / INQUIRY BY THE INCOME-TAX DEPARTMENT HAS BEEN MADE BEFORE COMPLETI NG ASSESSMENT PROCEEDINGS AGAINST THE ASSESSEE. ANOTHER ASPECT O F THE ISSUE IS THAT THE PETITION BEFORE THE SETTLEMENT COMMISSION HAS B EEN MADE BY THE ASSESSEE IN ASSESSMENT YEAR 2007-08 ONLY AND NO SUC H PETITION FOR CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY HAS BEEN MADE FOR ASSESSMENT YEAR 2008-09. THE ASSESSE E HAD OFFERED THE ADDITIONAL INCOME ON ACCOUNT OF SUCH CLANDESTIN E REMOVAL OF GOODS BEFORE THE ASSESSING OFFICER FOR ASSESSMENT YEAR 20 07-08 AND THE SAME WAS THE REASON FOR REOPENING THE ASSESSMENT UN DER SECTION 148 OF THE ACT. ONCE A PARTICULAR FACT WAS AVAILABLE W ITH THE ASSESSING OFFICER, WHICH WAS TAKEN NOTE OF AND CONSIDERED BY HIM DURING THE ASSESSMENT PROCEEDINGS, BUT THE ADDITION HAVING BEE N MADE ON ONLY ON THE ISSUE OF ERRATIC CONSUMPTION OF ELECTRICITY, WHICH IS THE BASIS OF ORDER PASSED BY CCE, AURANGABAD, WHO WAS ALSO IN KN OWLEDGE OF THE CLANDESTINE REMOVAL OF MATERIAL AND THE INVESTIGATI ON CARRIED OUT BY THE DGCEI AND THE PETITION BEFORE THE SETTLEMENT COMMIS SION, EVEN THE THIRD MEMBER OF CESTAT WAS AWARE OF ALL THESE PROCE EDINGS, BUT SINCE THE SETTLEMENT PETITION FILED BY THE ASSESSEE HAD BEEN ACCEPTED IN TOTO BY THE SETTLEMENT COMMISSION, NO FURTHER AD DITION COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THIS GROUND, I N THE ABSENCE OF ANY INQUIRY OR INVESTIGATION BY THE ASSESSING OFFIC ER. ACCORDINGLY, THE RELIANCE PLACED UPON BY THE LD. SPECIAL AR IN ASSES SEES OWN CASE REPORTED IN 137 TTJ 627 [PUNE] IS MIS-PLACED AND TH ERE IS NO MERIT IN THE ARGUMENTS OF THE LD. SPECIAL AR IN THIS REGARD. 58. ANOTHER PLEA RAISED BY THE LD. SPECIAL AR WAS T HAT INCOME COULD BE ESTIMATED/ TAXED ON THE THEORY OF PREPONDERANCE, IN TURN RELYING ON THE RATIO LAID DOWN BY THE APEX COURT IN SUMATI DAYAL VS. CIT (SUPRA) AND COLLECTOR OF CUSTOMS MADRAS AND OTHERS VS. D. BHOORMULL (S UPRA), WHICH WAS ALSO RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND THE SAME HAD BEEN CONSIDERED BY THE TRIBUNAL. DURING THE COURSE OF HEARING, THE LD. SPECIAL AR RELIED ON SERIES OF OTH ER DECISIONS, BUT THE RATIOS LAID DOWN BY THE SAID JUDGMENTS ARE DISTINGUISHABLE AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IT MAY BE PUT ON RECORD THAT ALL THESE DECISIONS WERE RELIED UPON BY THE LD. SPECIAL AR IN M/S. SRJ PEETY STEELS PVT. LTD. (SUPRA) AND SAME HAVE ALREADY BEEN CONSIDERED. 37 59. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIR CUMSTANCES, WE HOLD THAT NO EXTRAPOLATION OF SALES FOR 300 DAYS CAN BE MADE IN THE HANDS OF THE ASSESSEE ON THE BASIS OF THE EVIDENCE FOUND FOR CLA NDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY FOR FEW DAY S, WHICH IN TURN, HAS BEEN ADMITTED BY THE ASSESSEE BY WAY OF FILING PETITION BEFORE THE SETTLEMENT COMMISSION, WHICH IN TURN, HAS ALSO BEEN ACCEPTED B Y THE SETTLEMENT COMMISSION. MERELY BECAUSE THE SETTLEMENT COMMISSI ON ACCEPTED THE CLAIM OF THE ASSESSEE OF ADDITIONAL EXCISE DUTY PAYABLE O N THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY DOES NOT ESTABLISH THE CASE OF THE REVENUE THAT THE SAID FIGURES OF ADDITI ONAL PRODUCTION SHOULD BE UTILIZED FOR EXTRAPOLATING THE SALES IN THE HANDS O F THE ASSESSEE FOR THE ENTIRE YEAR. ADMITTEDLY, THE ASSESSEE HAD OFFERED ADDITIO NAL INCOME ON THE SAID CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, WHICH IS TO BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY ADMITTED THA T IN CASE THE SAID ADDITIONAL INCOME HAS NOT BEEN ADDED WHILE COMPUTING THE INCOM E IN THE HANDS OF THE ASSESSEE FOR THE RESPECTIVE YEARS, THE SAME MAY BE DIRECTED TO BE ADDED IN THE HANDS OF THE RESPECTIVE ASSESSEE IN RESPECTIVE YEARS. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE REC ORDS FOR THE RESPECTIVE YEARS AND INCLUDE THE ADDITIONAL INCOME ON ACCOUNT OF SUC H ADMITTED CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, BY THE ASSESSEE EITHER BEFORE THE SETTLEMENT COMMISSION OR BEFORE THE EXCI SE AUTHORITIES, IN THE HANDS OF THE ASSESSEE. WE HAVE HEARD BUNCH OF APPE ALS AND IN SOME YEARS, THERE IS NO ADMISSION OF CLANDESTINE REMOVAL OF MAT ERIAL WITHOUT PAYMENT OF EXCISE DUTY AND IN THOSE YEARS IN THE ABSENCE OF AN Y EVIDENCE AND / OR ANY INVESTIGATION OR INQUIRY MADE BY THE ASSESSING OFFI CER AND WHERE THE ASSESSING OFFICER HAS FAILED TO COLLECT ADDITIONAL EVIDENCE, NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE, BY WAY OF EXTRAP OLATION OF SALES FOR 300 DAYS ON ACCOUNT OF ANY EVIDENCE FOUND IN ANY PRECED ING OR SUCCEEDING YEARS. FURTHER, NO ADDITION CAN BE MADE IN THE HANDS OF TH E ASSESSEE, WHERE NO PETITION HAS BEEN FILED BY THE ASSESSEE BEFORE THE SETTLEMENT COMMISSION IN ANY OF THE RESPECTIVE YEARS OR BEFORE THE EXCISE AU THORITIES. IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD., THERE IS NO INV ESTIGATION BY DGCEI AND HENCE, NO ADDITION ON ACCOUNT OF EXTRAPOLATION CAN BE MADE, IN THE ABSENCE OF ANY EVIDENCE FOUND AGAINST THE ASSESSEE. 60. SINCE WE HAVE DELETED THE ADDITION IN THE HANDS OF ASSESSEE ON BOTH ACCOUNTS I.E. ADDITION MADE ON ACCOUNT OF ERRATIC C ONSUMPTION OF ELECTRICITY AND ADDITION PROPOSED ON THE BASIS OF EVIDENCE FOUN D FOR THE PART OF THE YEAR OF CLANDESTINE REMOVAL OF MATERIAL WITHOUT PAYMENT OF EXCISE DUTY, NEXT ADDITION MADE IN THE HANDS OF THE ASSESSEE I.E. ALL EGED INVESTMENT IN THE PURCHASES FOR EFFECTING SUCH SALES WHICH GOODS HAVE BEEN CLANDESTINELY REMOVED, IS NOT SUSTAINABLE. ACCORDINGLY, WE HOLD THAT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF ALL EGED INVESTMENT IN PURCHASES UNDER SECTION 69C OF THE ACT. 61. ONE ISSUE REMAINING TO BE ADJUDICATED IS NON IS SUE OF NOTICE UNDER SECTION 143(2) AFTER ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. IN VIEW OF OUR ORDER IN DELETING THE ADDITION ON ACCOUNT OF SU PPRESSED PRODUCTION/SALES, THE SAID ISSUE IS DISMISSED AS ACADEMIC. 62. IN VIEW OF OUR DELETING THE ADDITION IN THE HAN DS OF THE ASSESSEE THE GROUNDS OF APPEAL RAISED BY THE REVENUE I.E. AGAINS T APPLICATION OF GP RATE AND ALLOWANCE OF EXPENSES ARE ALSO DISMISSED. 13. THE LD. SPECIAL AR FOR THE REVENUE BEFORE US PO INTED OUT THAT ANOTHER ASPECT OF THE ADDITION IS EXTRAPOLATION OF SALES TO BE MADE IN THE HANDS OF THE ASSESSEE FOR THE ENTIRE YEAR ON THE BASIS INFORMATI ON RECEIVED FOR PART OF THE YEAR. IT MAY BE PUT ON RECORD THAT IN ASSESSMENT Y EAR 2009-10 IN THE HANDS OF VARIOUS FURNACE COMPANIES NO SUCH INVESTIGATION WAS MADE BY DGCEI. IN THE ABSENCE OF ANY INFORMATION GATHERED BY THE EXCISE A UTHORITY OF CLANDESTINE REMOVAL OF GOODS WITHOUT PAYMENT OF EXCISE DUTY, AN D IN THE ABSENCE OF THE ASSESSEE DECLARING ANY ADDITIONAL INCOME IN ITS HAN D, NO SUCH ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. HOWEVER, I N CASE ANY OF THE ASSESSEE HAVE ADMITTED TO CLANDESTINE REMOVAL OF GO ODS WITHOUT PAYMENT OF 38 EXCISE DUTY, THEN ADDITIONAL INCOME RELATABLE TO SU CH TURNOVER IS TO BE ADDED IN THE HANDS OF THE SAID ASSESSEE. WE HAVE ALREADY DEALT WITH THIS ISSUE IN DETAIL BY ORDER OF EVEN DATE IN THE BUNCH OF APPEAL S AS REFERRED EARLIER. 14. FOLLOWING THE SAME PARITY OF REASONING AS PER O UR ORDER OF EVEN DATE IN THE CASE OF BHAGYALAXMI STEEL ALLOYS PVT. LTD. & OT HERS RELATING TO ASSESSMENT YEARS 2006-07 TO 2008-09 AND IN VIEW OF THE PHYSICAL VERIFICATION CARRIED OUT BY THE AUTHORITIES AS REFERRED TO BY US IN THE PARAS HEREINABOVE AND THE CONSEQUENT ORDER OF DIVISION BENCH OF CESTA T IN THE CASE OF PRESENT ASSESSEES BEFORE US RELATING TO ASSESSMENT YEAR 20 09-10, WE FIND NO MERIT IN THE ORDERS OF AUTHORITIES BELOW AND WE REVERSE THE ORDER OF CIT(A). WE FIND NO MERIT IN THE ADDITION MADE IN THE HANDS OF THE ASSE SSEE ON ACCOUNT OF SUPPRESSED PRODUCTION CONSEQUENT TO ERRATIC CONSUMP TION OF ELECTRICITY. 15. THE APPEALS OF THE REVENUE AGAINST THE ADOPTION OF GP RATE OF 4% AND THE DELETION OF WORKING CAPITAL REQUIRED FOR INVEST MENT IN SUPPRESSED PRODUCTION IS ALSO DELETED BY US BY FOLLOWING ORDER IN THE CASE OF ASSESSEE AND OTHERS IN EARLIER YEARS AND FOLLOWING THE SAME PARITY OF REASONING, WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE . 7. SINCE THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL TO THE FACTS OF THE CASE DECIDED BY THE TRIBUNAL CITED (SUPRA), THEREFORE, FOLLOWING OUR REASONINGS GIVEN IN THE SAID ORDER WE HOLD THAT NO ADDITI ON CAN BE MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUPPRE SSED PRODUCTION CONSEQUENT TO ERRATIC CONSUMPTION OF ELECTRICIT Y. THE APPEAL OF THE REVENUE AGAINST THE ADOPTION OF GP RATE OF 4% AND DELETION OF WORKING CAPITAL REQUIRED FOR INVESTMENT IN SUPP RESSED PRODUCTION IS ALSO DELETED FOLLOWING THE ORDER OF THE TRIBUNA L CITED (SUPRA). THE GROUNDS RAISED BY THE REVENUE ARE ACCORDIN GLY DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. ITA NO.292/PN/2012 (BY ASSESSEE) (RAJURI STEELS PVT. L TD.) : ITA NO.429/PN/2012 (BY REVENUE) (RAJURI STEELS PVT. LT D.) : 8. AFTER HEARING BOTH THE SIDES WE FIND THE GROUNDS RAISE D IN THE ABOVE CROSS APPEAL IS IDENTICAL TO GROUNDS RAISED IN ITA NO.282/PN/2012 AND ITA NO.411/PN/2012. WE HAVE ALREADY DECIDED THE ISSUE AND THE GROUNDS RAISED BY THE REVENUE HAVE BEEN DISMISSED AND THE GROUNDS RAISED BY THE ASSESSEE HAVE BEEN ALLO WED. FOLLOWING THE SAME REASONINGS THE GROUNDS RAISED BY THE ASSESSE E ARE ALLOWED AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 39 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASSESSEES ARE ALLOWED AND THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 05-08-2015. SD/- SD/- ( SUSHMA CHOWLA ) ( R.K. PANDA ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER IQ.KS PUNE ; #$% DATED : 05 TH AUGUST, 2015. LRH'K &'()*+,+) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ' ' ( ( ) , +%,$ / THE CIT(A), AURANGABAD 4. ' ' ( , +%,$ / THE CIT, AURANGABAD 5. -., / , ' /' , IQ.KS / DR, ITAT, A PUNE 6. ,1 2 / GUARD FILE. &$ / BY ORDER , - // TRUE COPY // 34 5 /6 / SR. PRIVATE SECRETARY ' /', IQ.KS / ITAT, PUNE
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